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Wednesday, 09 November 2011 00:00
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Novices preferred

Trai wants to keep away established telcos in 700 MHz

 

The fascination for what is mistakenly called a ‘level playing field’ remains, and the telecom regulator Trai has now told the telecom ministry that it would like to keep out established telcos from the initial auctions of spectrum in the 700 MHz band. As and when more spectrum gets released, Trai has said, the old telcos can be allotted spectrum at the price paid by the new firms (the Raja allottees). The older players, the unstated logic goes, have a large customer base over which they can spread costs, they have largely amortised their capex, so the only way that newcomers can hope to compete is if they get the 700 MHz spectrum first—in 2008, this was the same logic used by A Raja when he gave out spectrum at 2001 prices! Apart from the fact that the established players will be able to make the most of the 700 MHz spectrum since they already have large subscriber bases—it would also help them to move to the next generation of networks, 4G or LTE—in no other industry are such policies prescribed. This is tantamount to giving General Motors a tax holiday, apart from free land, so that it can compete with the established Maruti or Hyundai!

What makes this curious approach to competition worrying is that this is the second instance of Trai doing this. Even though there is no instance of telcos complaining the current termination charge regime is unfair, Trai has suggested this be reduced to zero in three years—the only beneficiary of this are smaller telcos that are yet to establish themselves. Perhaps one of the jobs of the Competition Commission should be to explain that a regulator’s job is to prevent abuse of dominance, not to hurt the legitimate business interests of existing players even when there is no such abuse.

 

 

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