Sunday, August 19, 2012

CONSUMERS V/S OPERATORS V/S TRAI

India’s telecom ‘regulator’, TRAI was expected to facilitate the growth of the telecom industry. While growth created history, TRAI’s excesses also succeeded in doing the same

TRAI, or the Telecom Regulatory Authority of India has, in its 13 years history, taken many significant decisions trying to maintain a balance between all stakeholders – companies, customers, government – and their conflicting interests. It seems now that in many past cases, the balancing line was somehow conveniently shifted towards the corporations, and specifically towards some of them more than others.

Since 1997, TRAI has been involved in an increasing number of controversies – that part is a no-brainer. But two cases are key to understanding the glibness of what was fed the public versus what was reality. The first case relates to one of the biggest controversies with respect to the allocation of spectrum and licenses during 2008 to new telecom players. Spectrum and licenses were apparently granted to players simply on a “first-come-first-served” basis in 2008, that too based purely on the prices that existed way back in 2001. This issue has even rocked the Indian Parliament, with the virulent Opposition forwarding two examples. Swan Telecom had during that time purchased the licences and spectrum in 13 circles paying $340 million. But Swan very soon sold off almost half the stake to a 
UAE company, Etisalat, for a whopping $900 million, increasing its book value to $2 billion before it started operations.

Unitech, the realty group, is the other case when it bought a licence in the same year for $365 million, but sold 60% off to Norway’s Talenor for $1.36 billion, again increasing the company’s valuation to $2 billion, and similar to the previous case, without starting operations. (All this is quite similar to what the Sterling group did, after winning the cellular service providing licence in 1996-97. It sold the license to the Essar group without even starting operations). The Opposition accuses the Telecom Minister A. Raja of overseeing a loss to the exchequer of Rs.100 billion due to not auctioning the licenses, apart from not preventing the misuse of awarded licenses for private profit. A. Raja, in his defence, blames the TRAI completely, saying he followed TRAI regulations to the tee.


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