People's Democracy

 Unified Telecom License:

 Arun Shourie Vitiating a Sensible Move

 Prabir Purkayastha

ARUN Shourie, the minister of communications has been arguing that the TDSAT judgement on Wireless in the Local Loop (WiLL) cannot be implemented, as it will lead to “more litigations.” This argument should have been advanced to TDSAT or the Court of redress, the Supreme Court. Otherwise, the minister seems to be arguing that the government is better informed about telecom and law than the tribunal expressly created for this purpose. What Shourie is arguing is that if the regulator does not agree with the government then its decision should not be implemented. In other words, the task of the regulator or judicial authority is only to ditto the government line while absolving the government of any responsibility. It is not surprising that he has also argued that the Supreme Court judgement striking down privatising the oil PSUs without Parliamentary approval is the fault of democracy, where everybody has a veto. No wonder that in a recent three-part article he has talked about how democracy is not suited to economic development.

The latest attempt by Shourie is in a long line of such interference by the ministry of communications to help Reliance. The TDSAT judgement has correctly pointed out that WiLL(M) has to be seen as a value addition to existing WiLL permitted to Basic Service Operators and not a new service. It has also held that therefore it cannot be converted to a cellular license.

SUBVERTING TDSAT

Unfortunately, Shourie’s statement vitiates the sensible move for a unified license. What would otherwise have been an attempt to simplify the current complex regulatory regime will now be seen as a mala fide exercise to subvert the TDSAT order and secure for Reliance and others a back-door entry into cellular operations.

Litigations have been a recurring feature of the current telecom scenario. In any new system, transition is never painless. Unfortunately, in this case, a larger part comes from the botched up basic service and cellular tenders.

The problem started from categorising cellular services as value added services when it is fundamentally a voice service. Both landline and wireless should have been seen as carrier technologies with voice and data being different types of services on the carrier. The policy created two different segments of voice users, one, the cellular segment and the other, the fixed line segment who were walled off from each other in terms of the licenses. This precluded integrated network in which cellular and landlines are used in hybrid architecture or a common network – an option that would have been more cost effective.

This mistake however of separating cellular and basic services was a pardonable one, as most other countries had also followed this route. The other mistake, that of offering a part of the wireless spectrum to the basic services operators and asking them to provide WiLL was a bigger one and has led to the current spate of litigation. While the cellular services were designed to be only for wireless and mobile telephony, the Basic Services tender had also the provision of wireless telephony as it included the provision of WiLL. Worse, the spectra given was also a part of the spectra given to cellular companies. This meant that Basic Services Operators (BSOs) already had secured some of the wireless spectra as a part of their license, and could use this provision to expand the WiLL provision to limited mobility. After a number of consultations, TRAI recommended that limited mobility confined to one SDCA should be allowed. This was also accepting the reality that any consumer with a fixed wireless phone could substitute it with a mobile handset; there was no way this could be stopped.

ENCROACHMENT ON CELLULAR TERRITORY

Unfortunately, Reliance, followed by others, tried to use this provision to essentially convert their basic service license to a cellular one. TDSAT order now makes clear what should have been clear to TRAI and the government right at the beginning: Reliance and to a lesser extent Tata Teleservices, were throwing away the rulebook and poaching on cellular territory. The major chunk of WiLL(M) 4 million subscribers (about 3 million) have become users only in the last 5 months. By restricting WiLL(M) services, we will also penalise these subscribers who have been lured with false promise of full cellular services.

If we step away from the WiLL and cellular impasse and look at the larger picture, it would become clear on the need to move towards a unified license. We have now three kinds of voice services – fixed landline, WiLL(M) and cellular. We have different paying regimes for them, separate interconnection costs and so on. If we continue on this road, the ensuing regulatory regime will become more and more complex. Already, the attempts by the regulator to provide some kind of parity and recover the access deficit of the fixed landline operators has created new avenues for arbitrage. It is time we recognise that this system is not working and move towards a simple regulatory regime: a unified license in which all services are looked on as just services. A fixed good quality voice or a mobile poor quality voice would then be the choice of the subscriber. With dramatic decrease in cellular costs, there is little justification for high cellular tariffs. It will also allow the operator to provide whatever technology combination he/she wants. For a number of areas, a combination of land and cellular architecture makes sense, something that current licenses do not allow.

ISSUES INVOLVED

What are the issues that the unified license should address? In most of the discussions, we hear about providing a level playing field for various service providers. In all this discussions, the need of the consumers (or future consumers) is hardly mentioned. In considering unified license, it should not happen that the existing landline consumer is penalised even further in order to provide some false parity of the basic service operator with the cellular operators. In order to make all license holders happy, let us not once again increase the cost of basic services, particularly the low-end segment. Unified license regime should not result in the basic service providers extracting the additional license fees that they might have to pay by jacking up the rentals and local call rates of the fixed landline users.

 While providing the benefits of a unified license, we must not forget the plight of the rural subscribers. While the cellular and basic service operators run after affluent mobile users, the need of rural subscribers and expansion of the rural network --- supposedly the basis of the telecom reforms --- has gone into oblivion. The basic service providers have been willing to pay penalty for not fulfilling the obligations that existed for the basic service providers as a part of their license terms and conditions. Neither have they fulfilled their rollout obligations. It is a matter of shame that the penalty for not fulfilling rural telephony obligations works out cheaper than providing rural telephones. The precondition for a unified license should be fulfilling the rural and rollout obligations. And instead of cosmetic penalty, we must seriously consider either punitive penalties or cancellation of licenses to force the licensees to provide rural telephones.

The cellular operators have argued that if unified license is introduced for cellular and basic services, it must also include long distance license. This is a pernicious argument as the basic regime of long distance and international telephony – based on distance and access to the local network – is quite different from the local voice network. It is an attempt to argue that if the basic service operators get a cellular license, then give us also a long distance license. Since the government believes that fair play is giving away public revenue and picking the consumers pocket to benefit the private operators, they may even end up with this further concession.

The last thorny question, how do we make a transition to unified license for voice fair? Cellular operators have paid much higher license fees than basic service operators. If they want a unified license, the operators could pay the difference between the two license fees. For those that do not, they can stay where they are. In which case we need to implement the TDSAT judgement strictly. And also bring down the high cellular rates.