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Special Report
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Telecom Tellall
This high stakes game continues to fill the coffers of corrupt private players, even as the government loses millions.
Surbhi Chawla on the sector’s ugly past and present
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 Wireless telephony reached Indian shores in 1995 – the year Spectrum was allocated to private players for the first time. From those early days itself this sector has been plagued by controversies. Every minister who took charge of the telecom ministry found himself in the spotlight for all the wrong reasons. The unfortunate trend was started by Sukh Ram – the first telecom minister to take charge after the sector was liberalised. In 1996 when the Central Bureau of Investigation (CBI) raided his house, the sleuths had found crores of rupees stashed away in – of all places – his prayer room. The investigations that followed the seizure revealed that the minister had made this illgotten fortune from private players keen to hop onto the telecom bandwagon. The immense potential of the segment had the minister taking huge advantage.
It was in 2002 – during the NDA regime – that Reliance Infocom (now renamed Reliance Communications) and Tata Teleservices began introducing the CDMA technology in the country to replace GSM, which was all we had at the time. Back then the late Pramod Mahajan, who was telecom minister in that government, was alleged to have favoured big corporates by giving them Spectrum at a relatively low cost. Mahajan subsequently drew heavy flak in Parliament, where some among the Opposition had gone to the extent of branding him as the Reliance man in the NDA government.
Dayanidhi Maran was the next to be asked to vacate, though his own case was rather different from the others. For though Maran was M Karunanidhi’s poster boy, his brother Kalandhi, who headed the SUN TV network, was unacceptable to many.
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 And now it is the turn of Raja, who had come in as Maran’s replacement, to live up to this dubious legacy. His claim to fame has been awarding licenses to new firms such as Unitech Wireless, Swan Telecom, STel, Datacom and Loop Telecom. Pan Indian licences were handed out for just Rs 1,651 crore (rates that were set in a 2001 auction). Another criticism of these new players was that most of them had scant idea of the services desired of them. Eyebrows were also raised when licenses were awarded to these greenhorns on a first-come-first-serve basis. This cost the government dear, and the losses were estimated at a whopping Rs 2,000 crore. Then, in September 2008, still more fuel was added to the smouldering fire when Swan Telecom roped in UAE-based Etisalat to acquire 45 per cent in this venture for about Rs 9,200 crore. And Unitech Wireless and STel followed suit by disinvesting some portion of their firms to international players at astronomical prices.
Says a telecom analyst requesting anonymity: “The reason controversies have ruled the telecom sector is because it kicked off quite late, so that people became aware of the opportunities it could offer in a fairly short time. This made it a now-or-never opportunity for private players. The fast growth in the sector also meant quick bucks for certain people, which is precisely what we have been seeing.”
Indeed it is a fact that the Indian telecom sector has been growing at an exponential rate – being one of the fastest growing sectors in recent times with over 494.07 million subscribers according to the Telecom Regulatory Authority of India (TRAI). Wireless telephony is definitely the in thing. Even despite the slowdown 11 to 13 million new subscribers are added every month. And this explosive growth of the sector is matched only by the cutthroat competition among the players. As an industry insider revealed, “This is a high stakes game – one in which no one is willing to become the sucker, and it explains the rampant corruption in it. If any one party loses, it perversely seeks to drag its rivals into the quagmire also.” It is more or less the same story in sectors like defense and mining, which too have high stakes and high returns.
But one thing that is special to the telecom sector is that it is not just growing in size but in its scope as well. Earlier we had just GSM-based services; now there is CDMA too. And to these will shortly be added 3G and WiMax, followed by Long Term Evolution (LTE). None of these can enter till the government gives its nod, and without State involvement and intervention at practically every stage. And the political class is well aware of this. What also helps these venal folk is the considerable opaqueness that exists in this sector. “Considering that even the telecom bills that end customers get are not transparent one can imagine how murky things must be at the top,” says Praveen Kumar, Managing Director, Vie Capital.
In such a system the regulator, the TRAI, is bound to prove toothless. For what possible power can it exercise so long as the Department of Telecom (DoT) insists on having a chokehold on the sector? Even so, there is general agreement that the TRAI was among the best things to have happened to the telecom sector, because it is thanks mainly to it that there is so much competition to corner telecom space. Besides, telecom subscribers now have a far broader range to pick from: they can choose to pay 1paise per second, or have all calls at 50 paise per minute – or be charged per call rather than on the basis of the minutes spent.
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Surbhi Chawla
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