Jury’s still out on bias in BWA airwave sale to RIL

Tags: Companies
Is Reliance getting special treatment? Jury is out as to whether Mukesh Ambani-led Reliance Jio Infocomm was ‘favoured’ on allocation of broadband wireless access (BWA) for its 4G services causing huge revenue losses to the government.

The telecom industry is also divided on whether Reliance Jio Infocomm was ‘allowed back-door entry’ to launch voice ser­vices through BWA without a level-playing field for others and favoured with levy of ju­st one per cent annual spectrum usage ch­arge against 5 per cent for its competitors.

“There’s lot of heart burn in the industry that Reliance Jio Infocomm – a lateral entrant – was allowed to offer 4G voice services while it was primarily allotted BWA spec­trum for data transfers. The co­m­pany had paid a pittance for airwaves vis-à-vis others who got 3G spectrum at huge premiums,” said the chief executive officer of a top telecom services company, who did not wish to be identified.

The Supreme Court on Friday sought responses from the Centre, the Telecom Regulatory Authority of India (Trai) and Reliance Jio Infocomm on a public interest litigation seeking a CBI probe into allocation of BWA for 4G services to the Mukesh Ambani firm that allegedly caused Rs 40,000 crore loss to the exchequer.

A bench of Justice HL Dattu and Justice SA Bobde issued notices to the three respondents on a PIL filed by NGO, Common Cause, that had also earlier challenged irregular allocation of 2G spectrum and 122 licences to mobile service providers.

Hemant Joshi, telecom partner with independent consultancy Deloitte Haskins & Dells, said, “This (PIL) can at best be described as one more litigation for the telecom services industry that’s already bogged down with several cases.”

Others pointed out that data cards of 3G service providers are now being used for voice services as well. So, what’s wrong in Reliance Jio Infocomm launching 4G data and voice services via BWA?

Former Trai chairman Nripendra Misra told Financial Chronicle, “Reliance Jio Infocomm has won the BWA through auctions. What’s wrong with providing voice and data services?”

Other companies like state-run BSNL and Videocon also won BWA spectrum through bidding.

Providing voice services through BWA is like offering telephony via the internet (voice over internet protocol) leveraging technology and compatible handsets. Data services alone have little future, but the data–voice combination has some potential. In case the technology barrier is removed and handsets are made compatible, it offers a great business model, industry veterans pointed out.

The Cellular Operators Association of India (COAI) has opposed Reliance Jio Infocomm being allowed to provide voice services over BWA airwaves through 4G services.

COAI director general Rajan S Mathews pointed out that the price paid by RIL for voice services was Rs 1,650 crore, which was an old auction and not the most recent price. The cellular operators lobby has written to the telecom department, saying “this causes a non-level playing field and significant loss to the government.”

Further, Mathews maintained, allowing RIL to opt for voice when it had originally bid for ISP (internet service provider) enabled it to underbid for spectrum.

“If this change (allowing voice over internet akin to Skype telephony) was known before the auction, bid prices would definitely have been higher. Thus, it has resulted in revenue loss to the government,” Mathews told Financial Chronicle.

Added Mathews: “Allowing Reliance Jio Infocomm to continue to segregate revenue and pay only one per cent SUC when the rest of the industry has to pay 5 per cent or more has also resulted in a non-level playing field. This facility was not allowed for 3G spectrum winners (like Bharti Airtel, Vodafone, Idea Celluar).”

These are precisely the arguments being offered by NGO Common Cause, which claims a Rs 40,000 crore revenue loss to the government. Its petitioner Prashant Bhushan has also referred to the comptroller and auditor general (CAG) findings on the revenue losses.

A Reliance Jio Infocomm spokesperson said, “This (Common Cause petition) appears to be one more in a series of attempts to create a controversy in a next-generation foray, which Reliance is determined to create in the service of the nation.”

badarinath@mydigitalfc.com

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