Tap on the wrist

If there’s one thing that Reliance group shareholders can take comfort from, it’s that even at the height of the battle for control between its promoters, the group’s ability to get a more than fair deal from the government hasn’t been dented.

After the telecom regulator refused to do its job by investigating the matter and making suitable recommendations, the department of telecommunications (DoT) has issued a show cause notice to Reliance Infocomm, asking why it should not levy a Rs 150 crore penalty on the company for masquerading international calls as local ones and so not paying BSNL the statutory access deficit charges (ADC) on the calls.

The DoT’s kid glove treatment of Reliance should be compared with the 200 or more criminal prosecutions it has filed against individuals who were running small parallel exchanges illegally, and routing international calls in the grey market—in most cases, the loss of revenue was a few crore rupees, in some only a few lakh.

The surprising aspect of the penalty is that there has been no estimate (at least none that is public) of the loss caused by either Reliance Infocomm or any other telecom players that are involved in the exercise of evading ADC.

The maths is quite simple. India has seven billion minutes of international calls (incoming and outgoing) per year, and since Rs 4.25 has to be paid to BSNL for each of these minutes, it should be getting Rs 3,000 crore as ADC each year.

The problem is that while BSNL and MTNL seek to recover around Rs 550 crore from Reliance Infocomm for the grey calls they have detected on their networks, the two PSUs control just half the country’s telephone lines. So, they clearly have no knowledge of the grey calls that are terminating/originating from the networks of other private players, including Reliance Infocomm itself.

If DoT sticks to a fine of just Rs 150 crore on a theft that some have estimated at Rs 1,000 crore, this will be like the last time round when Reliance Infocomm violated the conditions of its licence on roaming services and got barely a light rap on its knuckles.

The implicit argument for imposing only a light penalty invokes consumer interest—if Reliance’s licence is revoked, what happens to consumers?

Since it is the international long-distance licence which has been violated, nothing really happens as consumers can seamlessly switch providers for their international calls—after all, players like Hutch don’t have international long distance licences but their subscribers make and receive international calls too.

If this violation, from one of the country’s biggest telecom players belonging to the country’s leading business house, attracts nothing more than a penalty of Rs 150 crore, then all the others against whom DoT has moved with stiffer punishment (including criminal prosecution) will have reason to complain to the courts of uneven treatment at the hands of the state, and they would have a point.