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Feeling the push: Telecom minister A. Raja, now subject to some prodding by the finance ministry


GOVERNMENT: TELECOM
Piper Calls The Tune
The Congress decides to get the DMK minister moving on a vital sector


Arindam Mukherjee


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Wirelessly Tangled...
There is still confusion on 3G spectrum base price. Finance ministry wants a price higher than that recommended by DoT.

Spectrum committee has suggested auction of 2G spectrum but government yet to take a final call on it.

There is no clarity on issues like Wimax and spectrum allocation for the service.

There are also some issues over mobile number portability which comes into effect from September.
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Finally, telecom minister A.

Raja is one of the busiest persons in the government these days. That is if you count several meetings with finance minister Pranab Mukherjee over the last week. The frenetic pace being set quite mirrors the tremendous pressure from within the government and from industry to quickly


Delays in crucial decisions, such as fixing a base price for 3G spectrum, have left the telecom sector worried.




change the state of suspended animation over key issues. For eight months or so, a decision on the controversial issue of spectrum allocation—the formula for the airwaves that operators need to run their services—has eluded Raja. Now, it's clear he is being gently shepherded to find solutions to the pending issues.

How times change. Even six months ago, Raja would have been all-powerful in this sphere, with a clear mandate. But the recent elections have changed the power equations. Thanks to the strong showing of the Congress, it's a different ballgame now—despite the minister having retained his portfolio. The prime minister's office (PMO), normally distant from such issues, is now a keen listener. The finance ministry, which has been exerting its influence over the telecom ministry over the last few months, seems to be well in control.

The Union budget on July 6 could have pleasant surprises for industry (which, to put it mildly, was surprised to see the minister back). For one, the finance minister could announce a spectrum policy—or at least its contours. Moreover, the government is expected to fast-track many of the key proposals hanging fire for several months. That's because the government is now keen to see decisions being taken—for its own good.

Also, in these troubled times, the growth of this star sector has been hampered. Despite the record number of new subscribers, fresh investments have been held back. India is already way behind other countries as far as rollout of 3G, which will allow high-end services, is concerned. And the delay in boosting the in-use 2G spectrum has caused existing services to falter every now and then. "The delays in crucial decisions is wreaking havoc on the sector as spectrum is one of the most important issues in telecom," says telecom analyst Mahesh Uppal.

Of course, the government has a vested interest. Spectrum auctions will fetch it huge revenues—Rs 25,000-30,000 crore as Raja put it earlier this month—crucial to address the burgeoning fiscal deficit. And if the finance ministry succeeds in pushing up the base price for 3G spectrum further, that number could be even more fanciful. Last year the telecom department had suggested a base price of Rs 2,020 crore for pan-Indian 3G spectrum. Looking at market dynamics—and the controversial experience from the last round of licences, when they fetched a handsome price in the open market—the finance ministry has upped the base price to Rs 4,040 crore. It is now learnt that a middle path of around Rs 3,500 crore is being considered.

The lack of a decision on spectrum already had the industry in a deep division between the older and new players as well as between the GSM and CDMA lobbies. While earlier the government found it difficult to decide on what route to take for spectrum allocation—allotment under licence fees like it was done earlier, or auctions—now, given that a decision has been taken to auction spectrum for 3G, it is struggling to decide on its base price.


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