India Telecom

January 8, 2004
Peace among operators, a feather for Shourie

NEW DELHI -- Arun Shourie, ICT minister, takes the cake for the breakthrough he achieved on the three-year-old rivalry between cellular and basic service operators. All of them have agreed to smoke the pipe of peace. The interminable legal proceedings on WLL (M) and other issues would be withdrawn.

Shourie has wangled for them a 2 percent reduction in the revenue share they have to give to the government. With this lollypop in their mouth, no wonder the two sides have decided to bury the past. What is more important, they would now go roaring into the future with market development mantras to get 100 million mobile subscribers in two years. If that happens, they would be doing more than what the former DoT with the government backing, could not achieve in 50 years for landlines that are at present stated to be around 50 million. The sop given to them might be only a means to get them to agree among themselves that their resources are too meagre to be wasted in mutual destruction to establish a principle.

One should not let the national determination to build a world class infrastructure unfocussed by troubled conscience over concessions to operators. It would be desirable to bring down the high revenue share proportionate to performance from the industry side. Shourie was politically savvy enough to announce the accord after his critics in Parliament went home for the Christmas holidays. If the operators are able to reach 100 million lines by 2005, they will pay more aggregate amount as revenue share than whatever the loss is to the government through the concession they have extracted from it. The economy would also benefit as teledensity and GDP growth, are now known to be inter related.

Both Shourie and the TRAI chairman Pradip Baijal were initially reluctant to concede compensation in terms of reduced revenue share as they thought this was against the commandments of market economics. Once they saw the larger benefit by giving in, the rest was perhaps easy to work out. Finance minister Jaswant Singh, desperately looking for funds on the budget eve, supported this futuristic outlook. The deputy prime minister had to intervene on the need for larger FDI in telecom versus the security angle. Shourie had his finest hour before the churches began the midnight singing with the ditty on the jingle bells and Santa Claus. He was now the Santa Claus -- a scene that this magazine envisaged in its December 2003 issue.

The peace agreement would promote acquisitions and mergers in the coming months. It specifically says so. Spice Telecom, Escotel and some others are probably ready to give up, and Reliance, Bharti and Tata Indicom are on the acquisition mode aggressively. Finally, there would be space only for three or four private operators with the public sector BSNL-MTNL as the Big Brother. The development would help the TRAI to re-jig the unified license for all services that it is working out. The regulator would have now to concentrate on development - Internet and broadband growth -- on which Pradip Baijal has prepared a consultation paper. The New Year should see India unfurling the Big Top in telecom networking.