Distorted signals

Telecom policy is finally moving towards a resolution of contentious issues. In the last few days, the group of ministers set up to go into this has had its first meeting, and will meet at least twice more in the coming week.

Opinion within the group is divided, with different interpretations of what transpired at the first meeting; indeed, the fact that different views are represented makes this ministerial group a good body to evolve an acceptable formula that unties what has become a Gordian knot.

Meanwhile, the issues have become more clearly defined. The telecom dispute settlement tribunal has ruled by majority verdict in favour of allowing the limited mobile companies to use mobile switching centres, and this is a critical victory for companies like Reliance Infocomm.

But the tribunal has come down hard on the government for not asking Reliance to stay within the prescribed licensing norms, and declared that Reliance should not on the strength of its basic licence be allowed to offer a service that is indistinguishable from that offered under a mobile licence.

The Telecom Engineering Group, meanwhile, has submitted a report which says pretty much the same thing: that Reliance has violated in spirit (if not in letter) the terms of its telecom licence. And the department of telecommunications’ legal adviser has told his bosses the same thing: that Reliance should not be allowed to violate licensing norms and offer roaming beyond the short distance charging area.

Any ordinary person reading all this can come to only two conclusions: that Reliance has found a technical loophole (the device of multiple registration for consumers) with which it has driven a coach and four through the regulations seeking to separate fully mobile services from those allowed to offer limited mobility.

And second, that the telecom ministry, headed by none other than Arun Shourie, has been simply refusing to take note of the obvious and do what is necessary and in line with judicial pronouncements.

The passage of time and events in the marketplace have brought in their own complications. With Reliance having booked some 3.5 million customers over the past few months, past transgressions have become in a practical sense a matter of penalties rather than the technically correct position, which would be to order discontinuation of the service, which if issued can only result in more court cases.

Critics will say that this is rewarding the law-breaker, and they have a point; but the more productive course now would be to work towards what Mr Shourie has been pursuing: a unified licence that allows everyone to offer any kind of service. The critical issue, therefore, is determining the basis for changing the existing rules in a way that is fair to all.

The cellular companies argue that they should be compensated for the loss of profit that they have already suffered on account of Reliance’s conduct and for future losses flowing from the forced entry of new mobile players, claims that the telecom regulator somewhat predictably seems to rule out. And Reliance argues that it should not be asked to pay anything more than the bids for the fourth cellular licence, which totalled less than Rs 1,500 crore.

Any decision that leans too far in one direction or the other will probably result in a final flurry of litigation before the action focuses exclusively on the marketplace — where telecom has become the country’s fastest growing sector, in part because of the bitter competition between hostile rivals.