Challenging TDSAT on 3G roaming a bad idea
Former telecom minister Kapil Sibal has reason to be pleased. After the Telecom Dispute Settlement and Appellate Tribunal (TDSAT) came down very heavily on the telecom ministry in the case of 3G intra-circle roaming, Sibal said he hoped his successor would challenge the judgment in the Supreme Court. Based on his interview in the Economic Times, that’s precisely what Ravi Shankar Prasad plans to do. Prasad told ET there was a view in “the highest echelons of the government” that this was a contentious issue and that “it will be important to acquire a structured view of the Supreme Court ... so that a precedent on the issue is set for once and for all”. While Prasad is doing the honourable thing by listening to his bureaucrats, he would do well to read the TDSAT judgment himself since it is rare for the court to come down so harshly on the telecom ministry. This is all the more necessary since the Modi government has promised to offer a transparent and investor-friendly regime—as the TDSAT has pointed out, every tenet of this was violated by the telecom ministry.
The story began in 2010 when the government auctioned spectrum in the 2100MHz band (loosely called 3G spectrum) for R67,000 crore. Since the government never had enough spectrum for everyone, bidders asked, and the government told them in writing, that they would be allowed to do ‘intra-circle roaming’—that is, if Vodafone didn’t have 3G spectrum in Delhi, its subscribers could use Idea’s 3G spectrum. Since the government’s annual revenues only increased if the spectrum was fully utilised, the only possible objection the government could have was if this sharing meant a Vodafone would choose not to bid for spectrum. Since subsequent auctions have shown telcos are still starved for spectrum, this is clearly not the case—if telcos are sharing spectrum, it is because they don’t have enough of their own. And, in any case, since intra-circle roaming is allowed on what is called 2G spectrum, there was no case for blocking it on 3G spectrum.
Which is what the TDSAT said when it opined the government’s arguments were “misleading”, its basic premises “seriously flawed ... and its extension to spectrums ... even more fallacious”. The TDSAT said the telcos asked for the government’s view before bidding “and the Government of India was supposed to give its answers with full responsibility ... (it) cannot be seen playing games in a matter of national importance”. While 3G roaming is quite distinct from retrospective taxation, policy changes banning intra-circle 3G roaming are also retrospective in nature—apart from being irrational—and frighten investors. It is unfortunate that, at a time when the government should be looking at ways to free up more spectrum for the industry, the telecom bureaucracy should be trying to convince the minister that it needs to have another go at vitiating the investment atmosphere.