Sunil Jain: Only permanent interests

RATIONAL EXPECTATIONS

The COAI trying to keep out competition is its job; what's worrying is the huge inconsistencies in Trai's stance. When Pradip Baijal was Trai chairman, he argued 3G services were a continuum of 2G services and so 3G spectrum should be given to the existing 2G mobile phone firms as a matter of course. Under Nripendra Misra, however, Trai rejected this and argued the two types of services were distinct; it used this argument to recommend that 3G licences/spectrum be auctioned. At the same time, however, it said the auction should be open only to firms with 2G mobile licences.

Why? Trai argued that unless firms had an existing 2G network, it would be difficult/uneconomical for them to roll out a 3G network. But if a firm without a 2G network wants to bid for 3G licences and loses money doing so, why should that be Trai's headache? Not so fast, Trai countered. If a non-2G firm won the 3G licence/spectrum and wasn't able to roll out its network, eventually it would be the country's consumers who'd lose. Fair enough. But just 6 of the current 15 or so telecom players in the country have a 2G network at the moment, the rest just came in now, after Trai made its recommendation that no cap be put on the number of 2G mobile phone firms (a suicidal one, given the huge spectrum shortage). In which case, how does Trai justify allowing the 9 newcomers to also bid for 3G licences since they clearly have no 2G network rolled out, either? Indeed, all that the recommendation does is to force wannabe 3G operators to bid for these 2G firms first