Redialling in telecom

A win-win way out of the mess is still possible

While investigations proceed, raids are conducted, Parliament’s Public Accounts Committee examines issues and the government looks to the future, it is now clear that few have come out of the 2G spectrum controversy without being tainted in one way or another. Businessman and MP Rajeev Chandrashekhar and Ratan Tata have exchanged letters that suggest that there are no angels in this debate. Ironically, however, there are few real losers in this game, not even the public exchequer. Not only does everyone have an argument in defence of their individual roles, and there are various agencies of the government and Parliament that will examine these issues, but even the consumer and the exchequer can claim to have benefited. The telecom revolution in India, with unprecedented connectivity and the consequent economic benefits it has brought to rich and poor alike, to slick urbanites and remote farmers, remains one of the major gains of the past decade. It has empowered consumers and brought huge revenues to the exchequer. Indeed, some analysts have shown that the auction model may have brought less revenue than the one adopted, in which lower tariffs and higher subscribers have benefited consumers, operators and government alike. How can the telecom revolution be saved and strengthened despite the scam? What can be done to ensure that the dramatic improvement in communications infrastructure in India is sustained and does not become a hurdle to 9 per cent rate of economic growth? The supply of telecom services, including broadband Internet, voice telephony and other services, must keep pace with demand. So, what is the way forward?

 

In an important comment on the issue, this newspaper’s columnist Shyam Ponappa has suggested (BS, December 2, 2010) a possible way out. The principal objective of the way forward should be the delivery of effective and efficient telecommunications services to as many customers as are there. Simplistic solutions, born of bravado and misplaced idealism, like cancellation of all licences, will not serve the consumer and the economy well. Nor is there an economic and fiscal case for auctioning given the phenomenal growth in demand and the consequent growth in revenue even as price of service has come down. Auctioning of confiscated spectrum also does not make sense. At any rate, the government must adhere to due process of law, penalising only those who are guilty and proven to be so of culpable wrongdoing. The solution Mr Ponappa suggests would encompass the development of all services as well as of hardware and software, and would liberate the policy debate from the narrow focus on spectrum allocation. Spectrum use can be structured, says Mr Ponappa, like road or rail networks, or oil pipelines, instead of being treated as exclusive property or usage rights. Consumers would benefit hugely, and so would service providers. Spectrum is a public good that governments control. Why should governments auction or licence this away permanently to private interests? Rather, a toll can be collected from every user as and when the facility is used. Such a toll-based system would be equitable and open. Offering public access to spectrum will make economic, business and social sense.