Arun Shourie Vitiating a Sensible Move

People’s Democracy

Organ of the Communist Party of India (Marxist)


No. 39


Telecom License:

Shourie Vitiating a Sensible Move



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.

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.




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

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.

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.

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




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.

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.





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.

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
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.

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.

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.