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The Empowered Group of Ministers (EGoM) on telecom has been tasked with a crucial role of evaluating and finalizing several key decisions, including the reserve price for the upcoming 2G spectrum auctions. Some of these decisions will permanently alter the landscape of the telecommunications sector in India, including the competitive arena, cost to operators, and price and quality of mobile, and in future, wireless broadband services to India’s citizens.
Given the fact that the EGoM is a collection of political leadership and not subject matter experts on issues of technology, economics, network efficiency or spectrum innovation, it is crucial that they either work with the set of recommendations made by TRAI - a specialist body by Government’s own claim, or else, they will need to detail publicly every single reason for changes – especially since they do not have a firm decision upon which to act from the Telecom Commission – the apex bureaucratic specialist policy making body n telecom.
To the EGoM, I make the following submissions:
1. The work of a specialist regulator - TRAI - should have been evaluated by the Telecom Commission with specific recommendations, since procedurally, the full Telecom Commission is required to take a decision given the sector-specific expertise and the resources that it has at its command. To leave these decisions to the EGoM without specific recommendations on file that convey at least the mind and decision of the Telecom Commission is deeply worrying.
2. The EGoM must be acutely aware that the Government, through its various Press Releases in 2008 and 2011, has emphasized time and again that its decisions in the past with regard to spectrum pricing and allocation procedure have been guided by the TRAI’s recommendations of 2007. This position has been publicly reiterated by several past and existing Telecom Ministers, Prime Minister, Deputy Chairman - Planning Commission and the current Minister of Law & Justice. It would, therefore, be a logical conclusion that the same expertise of the TRAI which was being cited as the reason for earlier decisions (January 2010) be upheld, especially since on this occasion, the TRAI seems to have done lot more specific and focused work in responding to the Government’s reference / Hon’ble Supreme Court’s direction.
3. Any attempt to significantly alter the recommendations made by the TRAI without detailed and proper justification will certainly be open to litigation, especially since the reserve price is an integral part of the forthcoming 2G spectrum auctions which have been directed by the Hon’ble Supreme Court itself. Unless valid, detailed and transparent reasoning is provided for deviating from TRAI recommendations, any decision of the Government will find it difficult to dodge judicial scrutiny.
4. The TRAI has received the reference twice over on the issue of reserve price. It has not only strengthened its reply during its response to the re-reference, but has, in fact, discarded all apprehensions by service providers relating to the hike in tariffs. These have been done in a methodological and scientific manner. Changing these would require the exact same rigour of approach. I trust the EGoM will keep in mind the enormous and high quality work that has already gone into making such detailed recommendations.
5. The recommendations on reserve price by the TRAI takes into consideration scientific factors and properties of spectrum, market economics, impact on local call tariffs, previous benchmarks, affordability and financial situation of the telecom companies. In effect, it combines multiple expertise before the statutory recommendation was made. Reversing or modifying the same requires the exact same expertise which is virtually impossible to collect at one place in a short period of time.
6. Finally, the authority of the regulator, TRAI has been eroded considerably over the last 10-12 years. This is TRAI’s attempt to regain its credibility by first submitting a well-argued and detailed position on reserve price, and later defending it without succumbing to political pressure or corporate lobbying. Upholding TRAI’s statutory recommendations - unless the EGoM can point to any significant flaws in the workings submitted by TRAI - would be the right and proper thing to do.
A new influence on the EGoM’s decision making is the change of leadership at the TRAI where Dr. Rahul Khullar has replaced the outgoing Chairman, Mr. J. S. Sarma. I hope that the new TRAI, under the Chairmanship of Dr. Khullar, will not suggest any significant variance on the work done by his predecessor. If so, it will be questionable since, at the heart of the detailed analysis and economic projections is the work and dedication of the officers of TRAI. Overturning that or even changing it will further erode TRAI’s credibility and reputation.
The EGoM is being ably assisted by some of the best minds on this issue, and is acutely aware of the need to bring certainty into the telecom sector based on respecting the work of a statutory authority. The EGoM must make a decision that upholds the interest of India’s citizens, the revenue objectives of the Government, the statutory authority of the regulator, and finally, the need to build institutional credibility at a time when India’s most progressive infrastructure sector faces its worst challenge in 18 years since the reforms first began in the early 1990s.
This article appeared in the Mail Today on July, 12th, 2012