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The debacle witnessed in the latest
round of auctions of precious airwaves for India's telecom sector
where close to half the spectrum on offer went unsold is another
rap on the knuckles of the country's official auditor and a lesson
again for the government.
The question, naturally, being asked is: Where is that presumptive
loss of Rs.1.76 lakh crore, or around $32 billion going by an
exchange rate of 55 rupees to a dollar, which the Comptroller and
Auditor General of India had so sensationally estimated?
There is no denying the fact that the government got it all wrong
in the manner in which it handed out 122 licences and related
spectrum to new telecom players in 2008 which was later ordered
cancelled by the Supreme Court, as it found the process followed
wanting.
But what the government actually got from the latest auction of
the airwaves of 1,800 MHz spectrum in 18 circles was just
Rs.17,343 crore ($3.14 billion) -- Rs.9,407.6 crore ($1.75
billion) and a one-time fee of Rs.7,936 crore ($1.44 billion).
Just 10 percent of that startling figure is mentioned as
presumptive loss.
To be charitable to the official auditor, its report had presented
several scenarios and said presumptive loss could be estimated at
between Rs.57,000 crore ($10.3 billion) and Rs.1.76 lakh crore.
But even the lower end of that estimate has proved to be
fictional.
What has happened in the interim?
In the case of auction of airwaves two years ago for third
generation (3G) telephony and broadband services, the government
did get a whopping Rs.106,219 crore ($19.3 billion). But the high
price took its toll on subscriber accumulation as the fee charged
had to be high.
A report by Wireless Intelligence, a global authority on data
related to the telecom sector, said India's 3G connection base was
estimated at a mere 33 million in the first quarter of 2012, as
compared to the total telecom subscriber base of around 900
million.
In the case of broadband, too, the subscriber base stands at a
mere 15 million.
Clearly, it is the customer who has suffered. India has, indeed,
come a long way since the 1980s when one needed proximity to
someone in authority to get a telephone connection. None of that
today. The subscriber base stands at 937 million, which is no mean
achievement.
But a much better technology -- read 3G and broadband services, as
opposed to second generation (2G) telephony -- at affordable
prices is also something which telecom subscribers must be
entitled to. Particularly when airwaves are scarce.
Therefore, in hindsight, the government has got it wrong this time
as well.
Harping on the erroneous calculations of the official auditor will
not help any longer, especially after the Supreme Court clearly
said policy-making was the executive's sole preserve and that even
the judiciary had no role to play in this regard.
The government, led by Communications Minister Kapil Sibal, says
the combined value of unsold spectrum is Rs.62,000 crore ($11.2
billion) at this realised price. Even if half of that is secured,
it will be close to the target of Rs.40,000 crore ($7.25 billion).
Is that the point? Not at all. The executive scored a point --
that calculations by the official auditor had no basis. But what
is in store is a more glaring scenario. That is the threat of a
30-40 percent hike in telecom tariff due to high spectrum cost.
This will bode ill for telecom penetration in India where the bulk
of the subscribers in terms of numbers are low-end users. At a
larger level, it will affect growth, as studies show that a
nation's output expands one percent if telecom penetration rises
10 percent.
The health of the industry is equally important -- millions of
people are employed by the telecom companies and billions of
dollars of public money is riding on them. There is also the
question of nation's credibility among foreign investors.
Clearly, the high reserve price fixed for the latest auction has
not worked. What else would explain an absolute lack of interest
among telecom players for Delhi and Mumbai circles, the two most
lucrative areas in the country for telecom revenues.
The government certainly needs to balance its policy, weighing the
options between the need for resources and prevention of
irrational bidding on the one hand, and ensuring market-led fair
price for airwaves and affordable telecom services on the other.
The best part in all this is that the myth of high presumptive
loss has been broken and even the Supreme Court has paved the way
for the adoption of right policy, without the lingering fear of a
future reprimand. But the government has to show maturity!
Arvind Padmanabhan is executive editor-business with IANS. The
views expressed in this column are personal. He can be reached at
arvind.p@ians.in
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