The telecom industry in India, which till recently was cited as the most remarkable growth story in the world, is on the verge of breakdown today, and requires urgent intervention from the government to prevent this downfall.

The sector which has been highly instrumental in escalating the socio-economic scenario of the country to such credible levels, is today reeling under heavy pressure and finding sustainability of business a challenging task.  While the scope and potential in the sector is plentiful; the lack of supportive policies, an overtly regulated system with no infrastructure status, unreasonably high tax structure, high regulatory levies and scarcity of key resources such as spectrum denies the private telecom operators a healthy growth in their businesses.

The industry has its expectations riding high on the National Telecom Policy 2011 in this context and is eagerly waiting for the Government to implement the same with a balanced approach towards the well-being of the industry as well as the users as has been indicated positively in its draft version.

However, certain regulatory recommendations that we have witnessed of late are totally in contradiction to the vision of the draft NTP 2012, and have yet again given rise to concerns in the industry on its future.

Recently, the TRAI has come up with certain recommendations on auction of spectrum, which seems aimed at strangulating the sector out of its sustainability. The industry has been taken aback by the arbitrary, regressive and inconsistent recommendations put forth by TRAI as regarding the auction of spectrum. The recommendations have come at a time when the industry is reeling under heavy financial burden and there is a strong decline in investor confidence.

It is therefore surprising to the industry, that being fully conversant of the present conditions; the TRAI has come out with a highly retrograde set of proposals/recommendations on spectrum auctions that militate against National Telecom Policies, are in violation of settled legal principles, judgments of the TDSAT and the Supreme Court; harms the consumers, jeopardises rural connectivity and is certain to further harm the financial health of the industry. The TRAI had not even considered the consequences that this could bring as many operators would (while two already have) shut shop, thereby resulting in massive job cuts and the inability of the remaining operators to expand business further constricting the prospective employment opportunities of thousands.

Moreover, it is surprising that these guidelines are based on erroneous and inconsistent calculations made by the Regulator; and COAI has highlighted these drawbacks in their analysis, with a number of credible financial analysts and reputed members of the academia having acknowledged and supported COAI’s findings and further elaborated on the implications of the recommendations themselves.

But the TRAI has been unresponsive to the industry in this regard, and has adamantly maintained its stand.

In the case of 3G intra-circle roaming also, we had observed that the policy put in place during the auction itself, created artificial scarcity of spectrum and restricted the number of players who could offer 3G services in each circle, enabling their sale at outrageous prices. And when the operators entered into mutual agreements so as to facilitate availability of the 3G service to people across the country, the government tried to squash that initiative by terming it illegal and levying heavy penalties on the industry in lieu of the same. The operators had no way but to take the matter to the TDSAT as the roaming arrangements were totally in compliance with the license agreements.

The TDSAT prevented the Government from taking any unfair action and is presiding over the matter presently.

Our concern is that the Government’s outlook should be on the benefit of all the stakeholders in the country and all policies should be drafted only after ensuring that the same is being fulfilled. If policies are drafted with an intention to extract as much revenue from the sector as possible, without paying heed to the long-term objectives and the wellbeing of the industry and its subsequent impact on the development of the nation, the objective of the National Telecom Policy is entirely lost and would be reduced to a mere piece of ornament.

The industry evidently and desperately is in requirement of consistent, clear, rational and transparent policies and regulations that ensure both affordability of tariffs to consumers and a fair return on investment to operators, thereby safeguarding the interests of all the stakeholders in the telecom fraternity. A “light touch regulation” approach that allows market forces to develop business growth would be beneficial for the industry as opposed to focusing on micro-management of the sector which, as we have seen in the recent past, often leads to reproachful results.

In order to make the services more affordable and widespread for the people, it is imperative that the unnecessarily high levies/fees at both central and state levels, that amount to as much as 30 per cent of the revenue today, are brought down to more reasonable and uniform levels.

Increased rural penetration, being a vital part of the Government’s agenda, should be driven by proper and well placed incentives.

And last but not the least, the crucial resource, spectrum, should be made available in adequate capacity and at such reasonable prices which acknowledge and compliment the cascading impact of telecom growth and investment on GDP.