|The winner?: Mukesh Ambani, Chairman,
since 1999, when the Vajpayee government facilitated the migration
of private telecom players from a licence fee regime to a revenue
sharing system, in the process bailing out a few operators, the
Indian telecom sector has been grappling with one tangle after another.
Four years down the road, the situation appears to have only got
knottier, with little changing in terms of clarity of policy. As
new chapters in this never-ending soap opera keep getting opened
(and reopened) just when you think the end is near, Business Today
attempts a bout of crystalballgazing to figure out the most likely
scenarios that will play out. Whatever the scenario, the consumer
is the winner... and likely the limited mobility guys too. Read
"The limited mobility service
will continue to be a full blown mobile service"
Let's just say that there's nothing limited
about it. At least as of today. And some 3.2 million users who have
opted for limited mobility services aren't complaining one bit.
Sure, there will be attempts to limit that mobility to within a
city, which is what the cellular companies are banking on to retain
their loosening grip on the wireless telephony market. So will mobility
be limited? That requires an amendment to the licences of the basic
operators, the ones responsible for the limited mobility service.
An amendment cannot be unilaterally effected and no company will
offer its licence for amendment to its own detriment. To get a flavour
of the mood in the limited mobility camp, read into this statement
of Amit Khanna, the spokesman for the largest player in this arena,
Reliance Infocomm. "We will do all that is required to ensure
that our consumer continues to get the service." This could
mean buying into a full-blown cellular licence or knocking on the
door of the apex court to prevent any anti-consumer, anti-public-interest
(but pro-operator) steps.
Who wins: Reliance, Tatas
Who loses: All cellular companies
"There will be litigation
but it will not disturb either service"
|Limited mobility is a legal service. The
tribunal order does not prohibit multiple registrations, which
allows the limited mobility firms to mimic a full mobile service.
For now, COAI is content pushing the government to implement
The cellular companies thought they owned the
applecart (projected to be worth 800 million wireless phones by
2020) and there are some who are not interested in conceding a single
apple (the names of a US-based multinational and a Hong Kong-based
one often figure in this list) and want to rush to the Supreme Court
to make their case with the backing of a pretty strong dissent note
that is part of the judgement legalising limited mobility. The view
of the pragmatists has, however, prevailed in the Cellular Operators
Association of India (COAI) for now and they are calling for limiting
mobility within a city as per the order of the telecom tribunal.
This represents 80 per cent of the overall market. The logic: Concede
the 80 per cent in exchange for an unfettered right to the balance
20 per cent market, which comprises those who roam outside the city.
This also happens to be the premium high-revenue market. No courts.
No fight. "But where is the fight? We have no quarrel with
anybody," says Khanna unabashedly, whose interpretation of
the order is simply this: Limited mobility is a legal service. The
tribunal order does not prohibit multiple registrations, which allows
the limited mobility companies to mimic a full mobile service. For
now, the COAI is content pushing the government (a letter a day)
to implement the order as they interpret it. It is only a matter
of time before the action unveils in the courts, before the extremists
take centre stage in the cellular association, and it will happen
sooner rather than later. An investment of Rs 25,000 crore is at
stake (and accumulated losses of Rs 8,000 crore, claims COAI). At
stake also is their survival. The view that the pacifist policies
are making the opposing camp stronger is gaining ground. This time
round the cellular operators are gunning for a fight to the finish.
Since the courts and the government would be unwilling to disturb
service to the millions of limited mobility subscribers, the cell
camp has even offered to take on the subscribers, lock, stock and
barrel. A laudable offer, but the only hiccup in the whole plan
is that in the Indian legal system, there is never a clear "finish".
What is clear is the advocates' fee (A few lakh per appearance).
Who wins: The consumer
Who loses: Can't say
"There will be no hike in limited mobility rates in the near
Before the year is out, the limited mobility
players will have to shell out an "appropriate fee" for
getting the right to offer the service. They may also be charged
additionally for spectrum. Will it be a token amount? Will it be
a significant amount? Will it be limited to the metros? The answers
will be provided by the government and the regulator, though the
case of the basic operators is that they have paid a higher entry
fee than the cellular operators (more than twice for the circles).
"We also get less spectrum and have much more stringent roll-out
obligations," says the Secretary General of the Association
of Basic Telecom Operators (ABTO) S. C. Khanna. When the national
objective, as encapsulated in the telecom policy of 1999, is to
increase the penetration of affordable telephony, this fee is unlikely
to be on the higher side as it would ultimately burden the consumer.
For the record, Reliance has ruled out any hike in tariffs.
Who wins: The consumer
Who loses: Reliance/Tatas
"A unified telecom licence
will be a reality within 12 months
|Shourie himself has admitted that it is futile
attempting to limit mobility since it will be matched by a more
intensive effort to get around the limits. And that will mean
yet another round of litigation. There is thus a strong case
for settling it once and for all with a de facto full mobility
licence for limited mobility firms.
If licensing is a matter of policy and the government
(in consultation with the telecom regulator) decides policy, then
India will go the unified licensing way with minister Arun Shourie
and Pradip Baijal, Chairman of the Telecom Regulatory Authority,
gunning for it with all their might. This means that the limited
mobility players will get to migrate to a licence with which they
can shed the last vestiges of limiting mobility (multiple registrations).
Shourie himself has admitted that it is futile attempting to limit
mobility since it will be matched by a more intensive effort to
get around the limits. And that will mean yet another round of litigation.
There is thus a strong case for settling it once and for all with
a de facto full mobility licence for limited mobility companies.
If you are wondering what is in it for the cellular companies, they
will get the right to offer basic telephony services also under
a unified licence. "But I already have that right," laments
COAI Director General T.V. Ramachandran. The cellular operators
want much more. They want to get a long-promised right to the long
distance market and they want to see the limited mobility players
pay through their nose for riding roughshod on their turf. It will
be a huge challenge to get the two opposing camps to find some common
ground with regard to the terms of migration to a unified licence.
Expect some litigation.
Who wins: Reliance/Tatas
Who loses: The cellular companies
"The ultimate solution is
the converged licence"
As if the problems within the telecom sector
are not enough, there is a section of people that wants to revive
the case for a convergence legislation, which brings together the
broadcasting, telecom and internet communities, and proposes a super-regulator
for all three. The Bill, tabled in 2001, has been in a limbo since
December 2002 when a parliamentary standing committee had said that
it was premature for the country to opt for such a legislation,
but had nevertheless given detailed recommendations of the changes
required. "Many countries have since moved towards a convergence
regime. That is also the way technology is moving," says Khanna
of Reliance. There is no doubt that voice, video and data will ultimately
converge and we can see the first signs of that convergence. However,
it is rare for legislation to precede technology. It generally follows
technology (think cordless phones, legalised long after they became
in the near future