The EGoM(Empowered Group Of Ministers) headed by the Finance
Minister Sri P.Chidambaram met on 08.10.2012 and recommended to the Cabinet
that all the existing telecom services companies have to pay a one time fee for
the 2G spectrum held by them over and above 4.4 MHz limit, prospectively for
the remaining period of their current license. This fee will be decided based
on the price to be arrived at in the coming auction for 2G spectrum, which will
be completed by November 2012. All the existing telecom companies have to pay a
total Rs 27,000 crore based on the minimum reserve price fixed for this coming
auction. If the auction found price is more, accordingly this total will
further increase. Among the existing telecom companies, BSNL and MTNL will be
the worst sufferers because of this recommendation, since BSNL has to pay an
amount of Rs 6250 crore and MTNL has to pay Rs 4640 crore, based on the minimum
reserve price. This recommendation of the EGoM has to be approved by the
Cabinet. Otherwise it will not come into effect.
When BSNL and MTNL are facing continuous losses due to the
policies of the Government, how they can pay this huge amount now? It is to be
noted that BSNL posted a loss of Rs 8851 crore and MTNL posted a loss of Rs
4018 crore in 2011-12, in addition to the losses already they incurred in
2009-10 and 2010-11. Imposing such a burden now in the name of spectrum they already
are having will push them into further losses and difficulties. Moreover there
is every justification for exempting BSNL and MTNL from any such payment.
To understand the reason behind this recommendation of the
EGoM, we have to understand the way spectrum was allotted to telecom companies
since 1994. The private operators who got their mobile licenses before 2001 got
them at a nominal entry fee, which is almost freee of cost, initially for the metro cities and
subsequently for the other circles and got 4.4 MHz initial spectrum bundled
with it free of cost. Subsequently these operators were given spectrum upto 10
MHz free of cost, depending on the number of subscribers they got. But the
telecom companies who got license in 2001 or there after until 2001 have paid
Rs 1650 crores for pan India spectrum (spectrum for all circles). They also
were initially allotted 4.4 MHz spectrum and it was increased further
dependiong upon the increase in the number of their subscribers they got.
In 2008 the then
Minister A.Raja, in the name of First Come, First Served principle, allotted
initial spectrum of 4.4 MHz to some new telecom companies at the same price of Rs
1650 crore decided in 2001. The Supreme Court in its judgment on the 2G
spectrum allocation, cancelled all these licenses and spectrum allotments given
in 2008 saying that they were illegal. It directed the Government to auction
the 2G spectrum that would become free due to the cancellation of these licenses.
This auction would be completed by November 2012.
A question arose in this process. While the new telecom companies who will buy
spectrum in the auction thus to be held, at a higher cost (which will be a
minimum of Rs 14000 crore for 5 MHz spectrum for all circles) in the auction,
the existing operators have only paid Rs 1650 crore or even less for spectrum
of more than 4.4. MHz, even upto 10 MHz in some circles. This will be discrimination.
Hence the EGoM recommended that the existing operators have to pay the auction
determined price for the spectrum they hold beyond 4.4 MHz, for the remaining
period of their license proportionately.
But how this will end
the discrimination? The existing operators got the entire spectrum free of cost
till now and now as per this recommendation of the EGoM, they will continue to
have spectrum upto 4.4 MHz free of cost or at the most for Rs 1650 crore, till
the end of their present license period.They have to pay for the spectrum held
by them over and above 4.4 MHz, that too, only for the remaining period of
their license. But the new operators
who will buy spectrum in the auction now have to pay for the entire quantity of
spectrum they will get for the full license period of 20 years. Therefore the
recommendation is not actually ending the discrimination.
Besides this discrimination between the private operators (existing
and new), there is a serious discrimination against BSNL and MTNL. While
Airtel, Vodafone etc were given license for their mobile sevices in
1993/1994/1995 for various circles, the BSNL and MTNL were given mobile
licenses only in 2000. The present license period of 20 years will be over by
2013/2014 or 2015 in case of Airtel, Vodafone etc.
In Delhi and Mumbai,
Airtel and Vodafone were allotted spectrum in 1995/1996 whereas MTNL was
allotted only in 2000. In Kolkata Airtel was allotted spectrum in 1995 whereas
BSNL was allotted in 2000 only. In Maharashtra, Idea was allotted spectrum in
1995 whereas BSNL was allotted in 2000. In Gujarat,Tamilnadu, Kerala, Vodafone was allotted spectrum in 1995 whereas
BSNL was allotted in 2000. These are some examples only. But almost in every
circle there was atleast one private Company which was allotted spectrum in
1995 whereas BSNL was allotted spectrum in all its circles only in 2000. The allotment
to the private operators in 1995 and to the BSNL and MTNL in 2000 is free of
cost without any one time payment.
But the license period
(20 years) of the private operators who
got spectrum in 1995 would expire in 2013/2014/2015 whereas the license period
of 20 years for BSNL and MTNL will be over by 2020 only. Thus the private
operators who were allotted spectrum in 1995 got their spectrum free of cost
until 2012 (for 17 years) and will pay
the auction determined price only for the remaining 1 to 3 years period only. But
BSNL and MTNL who were allotted spectrum
only in 2000 got it free for the period 2000 to 2012 (12 years only) and have
to pay the auction determined price proportionately for the remaining 8 years
of their license period until 2020 and hence it will be too high compared to
the private operators. Therefore during the initial license period of 20 years,
the private operators who got spectrum allotted in 1995 would be paying far far
less than BSNL and MTNL. Such discrimination against BSNL and MTNL is
unwarranted.
It is thus clear that the recommendation of the EGoM is
helping the existing private operators compared to the new operators who have
to obtain spectrum afresh in the auction to be held in November 2012 and at the
same time aimed at imposing discriminatory and unbearable burden on the already
loss making PSUs BSNL and MTNL.
Besides being discriminatory, this payment in the name of
spectrum from BSNL and MTNL is unjustified on several grounds.
a)
BSNL
and MTNL are “State” as per the Constitution of India and hence as the State they
are the owners of the spectrum allotted to them, on behalf of the people. State
can exempt itself from any such payment
while collecting the same from the private parties.
b)
As
per the para 69 of the judgment of the Supreme Court of india in WP(Civil) No.
423/2010 cancelling the licenses granted in 2008 along with spectrum allocation
for those licensees, the doctrine of equality implies that the procedure
adopted for distribution of natural resources does not discriminate between
similarly placed private parties. Therefore the doctrine of equality is
applicable only among the private operators and hence the PSUs BSNL and MTNL,
being part of the State, can be exempted from payment for spectrum.
c)
BSNL
and MTNL are carrying out enormous social obligations whereas the private
operators are not fulfilling such social obligations. BSNL is providing
landline services in rural areas incurring losses. BSNL and MTNL are providing
nearly 80 per cent of the broadband connections, by maintaining landlines
incurring losses. They are providing employment at a far higher level compared
to private operators and also implementing SC/ST reservations where as the
private operators are not implementing reservations. They are encouraging
domestic telecom equipment production by procuring 30% of their equipment
requirement from domestic manufacturers like ITI where as the private operators
are not encouraging indigenous production. They are catering to the security
needs of the country in telecom sector whereas the private operators are having
their networks installed, maintained and operated by foreign equipment
manufacturers thus endangering the security of the country. Hence there is full
justification for exempting BSNL and MTNL from the payment for spectrum.
d)
In
China, the PSU telecom operators are granted spectrum free of cost and there
all the telecom operators are PSUs only.
In view of the above facts, no payment need be collected from
BSNL and MTNL for the spectrum. This attack on BSNL and MTNL must be stopped. The Government should be pressurized to exempt
BSNL and MTNL from this spectrum payment. The Government also should be
pressurized to refund the BWA spectrum amount to BSNL for the BWA spectrum
surrendered by it.
---P.Asokababu
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