Spectrum Scum…

The 2G spectrum scam has been occupying the spectrum of Media for sometime and it has resulted in Raja’s resignation.

While scams are the hallmark of Indian politics, in this issue, policy is getting hopelessly mixed with corruption.

Auctioning or Licensing or Revenue Sharing is a policy issue. Neither the media nor the Supreme court nor the Comptroller and Auditor General office can decide it. Policy is the issue of Parliament.

My accountant (CAG) can highlight or bring to my notice the impact of my business decision. He cannot be the Judge of it. Similarly a referee cannot play the game. He cannot lay down or dictate the rules. He is only an overseer of the rules.

The word ‘Revenue Loss to Exchequer’ is being liberally used in media. The reality is that revenue loss cannot be judged in isolation. It has to be seen in a greater context of overall national development. Hence it is not fair to judge the ‘loss to exchequer’ in terms of ‘auctioning the spectrum’, as ‘auctioning the spectrum’ may bring more loss to society as such.

But wait, this blog is not to support Mr. Raja. For we know what BSNL was when he took over. It was a Company brimming with Confidence and surplus, Challenging all the Private Operators. Now what it is..? Almost a Sick public sector company running into losses, waiting to be handed over to Tatas and Bharatis and Reliance. The brunt of politician’s corruption is always borne by Public Sector companies in India.

The Ministry of Telecom and IT has been a corruption source for long time in India.  We suddenly found few Big Businesses operating mobile services without having to pay a single penny for license fee (while others paid them) with political support, causing huge loss to ‘public exchequer’. The minister and his Government should have made a huge ransom on it.

We also found a Big Business company terminating international calls on its lines and diverting them to local residences without an International license, causing loss to public ‘exchequer’.

We also found a Big Business company that sold millions and millions of Rs.500 Handsets (with Talktime) to everyone in the country without any verification. And when they lost their handsets (as many absconded or threw the phones off after using them), the charged the State-Insurer and got money for all their lost handsets. Thus they made the Government and people to finance their business growth.

And then we found in one night the license fee system was scrapped and ‘Revenue sharing’ model introduced in another Government, causing a huge loss to ‘public exchequer’. The concerned Minister was called a ’200 crore’ man by his own brother.

And now we found the Government giving license to name-board companies, which were later ‘merged’ with Big Businesses, as ‘acquisitions’ are not allowed.

If in all these cases, if you think the concerned Minister was the Corrupt person, I can only laugh at your own foolishness. In India, if there is a scam that happens involving hundreds of crores, it can happen only under OPEN eyes, which means that everyone from Prime Minister, Party secretaries, Party Leaders (including some in opposition too) all get a share and the parties get a share too.

In Mr.Raja’s case also, it would be naive to believe that if indeed Raja has been corrupt, then our Prime Minister, Congress Party Leaders, DMK Leaders were not involved in it.

But all this does not go to justify this stupid policy of Auctioning the 3G Spectrum. Spectrum is Nation’s asset. It cannot be sold off to individuals.

Can we auction Bay of Bengal and Arabian Sea, saying that we are getting 32000 crores today for country’s development..?

Can we auction off the National Highways of this Country saying we are getting a good price for it today..? Spectrum is also our National Highway.  It should not have been  auctioned.

Yes. The Europeans auctioned it and got huge money. What happened to that money..? That money is paper. It either got devalued or got spent. Now nothing exists with most European Governments. All their spectrum auctioned money is gone. Most of them are in deep debts.  And they have also lost any ability to make more money out of the 3G Spectrum now, though it is really getting used now in Europe.

So, why should we follow the Europeans and Americans..?

In India Mobile services and Internet services grew not just because of competition within Private Sector Players. It also grew because BSNL, the public sector player revolutionized internet broadband at Rs.250 , voice calls at Re.1, introduced ’95′ services to cut-down ISD costs etc. BSNL has been actively setting the competition and was profitable, till Mr.Raja took over.

Hence Government abdicating the 3G spectrum to big business may not turn out to be a right move, in terms of nation’s growth.

Few Big Businesses got all the spectrum that was auctioned. Now they are the masters of our National Highway. If we think they have paid this money and will make serious attempts to grow the business or technologies in this field, I doubt it.

They will find ways of getting the money they spent, back from Government and Public Sector  Companies(like they did in Handsets case or did in introducing ‘walky’ services as ‘fixed’ liense). They will take the money they spent on this very soon.

And what will happen to money they paid currently to Government..? It will get spent on Government Programmes and in the process totally eaten up by Politicians and Babus. It will get spent on big business projects carried out by the very same few players who are operating now in Telecom sector. Thus the money they spent will reach them back along with precious spectrum in kitty and help further their business.

Anyway this money will loose all its value in ten years. We will all be left gaping at the money this spectrum is making for these business houses in another ten years, with no benefits to the nation as such.

The right method for Spectrum is to license it for every 2-3 years and go for ‘Revenue Sharing’ with operators. This way we can keep raising the Revenue Sharing percentage based on the acual revenues that are happening. We will keep getting continuous money with rising value always.

As technologies evolve, utilisation of spectrum changes. Governments will have ability to influence operators choice and direction of technologies, based on technology focus of the country. Governments will have incentive to develop indigenous R&D on technologies with this continuous flow of money.

So, in my view, what Raja did was right, in 2G spectrum.  To license the 2G spectrum to multiple operators with licenses and bring in competition. But as usual like his predecessors, if it indeed he had been corrupt, he probably licked the honey pot that he was holding along with his colleagues and leaders.

But what Raja did was wrong in 3G spectrum. To auction the precious 3G spectrum to big businesses, which is liking selling our eyes to buy a painting. In this process, if he had been corrupt, he and his leaders stashed away the pots for their future use.

But as it happened with ‘Walky’ services, as it happened with international call terminations, as it happened with Rs.500 handsets, as it happened with Revenue sharing migration, we will forget it all in coming weeks and it will get regularized in some form.

But then we all need to remember that the effect of these corruptions cannot be easily gauged. They are silent killers of the society.

-TBT