Editorial: Friendly fire

More than this, some of Mr Singh's "demands" could easily backfire on Mr Ambani. Telecom is a good example. Mr Singh has argued that cellular mobile phone firms such as Bharti Airtel and Vodafone-Essar have got large chunks of spectrum free, and that they should be made to pay for it. The radio waves, or spectrum, on which telecom firms send and receive signals from the mobile phones of their subscribers, like all things in short supply, command a very high price. Mr Singh has argued that while the cellular mobile licences promised only 6.2 MHz of spectrum, these firms have 10 MHz of spectrum today. The cellular industry has written to the Prime Minister to say that this is not the case, and that the government has benefited handsomely from the industry's growth, but Mr Singh has a point. The mobile phone industry got the additional spectrum on the basis of the number of subscribers, but the allotments were not on a consistent basis. For instance, an April 15, 2004, order by the government talked of giving 15 MHz of spectrum to CDMA-mobile phone firms such as Mr Ambani's Reliance Communications, which means that CDMA mobile phone firms are entitled to three times the spectrum they currently have! Six days after this, another order talked of only up to 10MHz of spectrum; in December 2004, a fresh order reduced this further to 5 MHz, and in March 2006, this subscriber-linked spectrum was raised to 7.5MHz for CDMA mobiles!

 

It turns out that the government agrees with Mr Singh; the department of telecommunications has mooted a proposal to charge a one-time fee for spectrum, complete with a penal rate of interest. Apart from being the right thing to do, it is also politically expedient since it will please the government's new-found ally. But if Mr Singh's desire to prevent losses to the exchequer is to be taken seriously, surely Anil Ambani should not have been given additional spectrum to start cellular mobile telephone services at a bargain basement price. But that is what happened. The last time cellular mobile spectrum was auctioned was in 2001, and a price of Rs 1,651 crore was paid for an all-India licence; at the time, the market had only about 4 million subscribers. Today, the industry adds that many subscribers in two weeks. Yet, it is at this old price of Rs 1,651 crore that Mr Ambani was given his new spectrum earlier this year. So, if the cellular mobile phone industry is to pay the correct price for the "extra" spectrum it got, surely Mr Ambani should pay the correct value, preferably through an auction, for what he has just got. The amount could well be several thousand crore rupees, a pittance compared to the extra amount that Mr Singh wants the likes of Bharti and Vodafone to shell out. Talk about friendly fire.