Q&A - JS Sarma, TRAI Chairman
"We cannot set our policy to suit individual needs"
Telecom Regulatory Authority of India (TRAI) Chairman JS Sarma has been in the eye of the storm after recommendations on auction of telecom spectrum rolled out late last month. The domestic and foreign players have opposed it tooth and nail—even threatening legal action— but JS Sarma has been doggedly defending the recommendations. Spectrum which was initially being sold at 2001 prices has been adjusted to the 2012 price—which would earn the country Rs 7 Lakh crore, he tells G Vishnu
TRAI chairman JS Sarma
Photo: Tribhuvan Tiwari/Outlook
There has been tremendous opposition towards the latest recommendations put forth by the TRAI on 2G auctioning. What do you have say to the industry that has almost gone into a panic mode?
Technology in telecommunication has changed completely and at a rapid pace. What’s good this year will be obsolete next year. That is something people must understand. A smart phone today consumes 37 times more spectrum than an ordinary phone because of its applications, a tablet consumes 120 times more. Plus, there’s a massive demand. Therefore the need for Spectrum has risen tremendously. Even the Supreme Court has directed – that effective use of Spectrum is absolutely necessary. We have removed the restrictions on the usage of 800, 900 and 1800 MhZ of spectrum and liberalised it. Let the licensee use it in the manner he wants. We have nearly 900 million mobile phone users now. Therefore to compare 2008 prices of spectrum—which is nothing but the 2001 price—on 2G is wrong. We are not even talking about simple 2G band spectrum. We’re talking about a liberalised spectrum that can be used for multiple purposes for the next 20 years, without artificial constraints imposed by the licensor. Apart from 3G auctions we have no other references in India to determine the optimum price. There lies the point; a liberalised spectrum is capable of doing much more.
What do you make of the panic reaction from the industry, especially international players who threaten to pull out?
Those are individual business decisions. We cannot set our policy to suit individual needs. If the competition is healthy, the prices will go up. [Even] if the competition is not good, at least the country stands to earn something. That’s why we have fixed the prices close to the market value.
There have been complaints about the high reserve price and how it will affect the consumer.
It is indeed high. We have to consider two things. First, will our policy affect the growth of the industry? Second, will this policy affect the consumers? Our policy will not affect the industry. The cost shouldn’t differ more than two or three paise per minute… in the first year it might seem a lot. That’s because excess spectrum is to be paid first. In the later years prices will keep going down. The future is data (not voice). Everybody acknowledges that 50 percent of revenue is expected to come from data. At the rates we have prescribed, the country will be earning rupees seven lakh crore. If I can get seven lakh crores without affecting the industry, without affecting consumer greatly, where does the problem arise? I should get a proper value. What’s wrong if nation earns the value of the spectrum? Should all the money be in private hands?
With the 2G spectrum scam in the backdrop, the players are complaining that the telecom sector is in doldrums. Some of them are considering legal action if the recommendations on re-farming the available spectrum are accepted.
There is nothing new that we have said on re-farming [of the spectrum]. In May 2010, we recommended that 900 MhZ spectrum be re-farmed – i.e, it should be taken back and replaced with 1800 MhZ. We are sticking to that. The government has examined the recommendation and so have various committees and the telecom commission. The government took the decision that re-farming is acceptable in principle. Our due date was May 2012 (30 months before the date of renewal of spectrum for industry) and we are on time. Re-farming of 800 and 900 MhZ is expected to bring in rupees three lakh crore revenue to the government. This is part of the expected seven lakh crore package. Apart from BSNL and MTNL, 900 MhZ spectrum is currently in the hands of three private players. On renewal, they don’t have a right over that spectrum.
Concerns have been raised regarding the availability of spectrum. There are allegations that TRAI is creating an artificial shortage by making just 5 MhZ available.
Even the price that we have fixed today is a reference price. It has been derived from the 3G auctions. It is close to 2012 prices. And yet, we have to realise that the price recommended for, say, 1800 MhZ is not the defining price. What is the price of 1800 MhZ spectrum? Those opposed to our recommendations are simply asking us to make available all the spectrum that we have and realise the current price. With this the real value of spectrum will be found. Those opposing the policy are used to spectrum being priced cheap, we have raised the bar a bit. The country has just started growing, the consumption will also grow.
G Vishnu is a Correspondent with Tehelka.