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3G Roaming Scam Or Just Poorly Thought Out Policy?

In a story just out, DNA reports that the Indian Telecom Regulator has sent a letter to R Chandrashekhar, Secretary, DoT, highlighting that telecom operators have begun offering 3G services in areas not allocated to them, wherein they did not pay a license fee. This refers to a roaming/spectrum sharing arrangement inked between telecom operators, but uses that phrase we hear often related to scams – “loss to exchequer”. Here’s our take on this arrangement:

1. The Auction itself was a flawed approach: It focused on maximising returns for the government, not on maximising consumer benefit. As a result, we have operators with only 5Mhz of spectrum each, split across telecom circles so that none has pan-India coverage, and they have all been forced to pay exorbitant amounts for a land-grab of spectrum that doesn’t quite work to their advantage. The fact that some of them have chosen to tie up and share spectrum shows that they don’t view 3G as a competitive advantage, and it was only a defensive move to take part in the auction.

The meantime, the government policy focused on maximimising profit and creating artificial scarcity and boundaries has resulted in some consumers being effectively denied access to high speed spectrum just because their preferred telecom operator did not win spectrum in that circle. The government policy on the 3G auction has been out of sync with consumer needs and the state of the telecom industry, looking only at financing its own fiscal deficit. If you want consumer benefit, telecom operators should be allowed to share spectrum – whether 2G or 3G – and focus on maximising ubiquitous availability of affordable consumer services. Right now you have some telecom operators with more consumers and less spectrum, leading to poor quality of service, and others hoarding spectrum with not enough consumers, leading to wastage of spectrum utilization.

Perhaps the the DNA article could have also taken a broader point of view and looked at the flawed policy that has resulted in this arrangement.

2. What was the TRAI doing till now? These ‘Roaming arrangements’ don’t appear to be in line with government policy, but was the TRAI asleep when the arrangement was first made public in June? What has led to them sending this letter a full four months after the services became active. What this delay has meant is that there is little chance of a roll back of the service because customers would (we assume) already have signed up for the service. This way, the TRAI has given enough time for them to build a consumer base so the roaming arrangement is unlikely to be revoked, and fines will probably be imposed. How convenient and/or incompetent. This is not dissimilar to the issues around the 2G scam, where the government ignored the situation until the criticism blew up big.

3. Why does only DNA have a copy of this letter? If the TRAI has sent a letter to Chandrashekar, it is a matter of public record, and should be up on its website. This selective sharing/leaking of information isn’t right. It makes for a good exclusive story for DNA, but frankly, this information should be up on TRAI’s website. We’ve seen letters relating to the 2G scam surfacing over the last couple of months – why weren’t they made public in the first place? Why did we have to hear from Qualcomm that its application for a BWA license was denied, and not read it on the Department of IT’s website? Where is the transparency in policy making?

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