Some of the licences for cellular mobile telephony will come for renewal from next year onwards. The telecom regulatory authority of India (Trai) seems to have recommended a very steep, fivefold increase in the spectrum charges for the 2G services when they come up for renewal. It is the low-spectrum charges and migration from upfront fixed licence fee payment to revenue share that have unleashed the explosive growth of cell telephones in our country. Technology and competition have brought down prices to such levels that could be afforded by even the so-called poor people who buy prepaid (within their affordable means) service, an innovation the private telcos introduced. We have over 850 mn cell phones, growing at over 10 mn per month.
An increase in the spectrum charges will add to the cost of the company. The profits of the cell phone companies have been coming down quarter after quarter. They may soon run into losses. If the spectrum charges are increased, losses will also increase. The companies would be forced to raise prices and their marginal subscribers mainly in rural areas may drop down. This outcome is undesirable.
It is understandable as to why the regulator and the department, both of which should plead for consumer welfare, are competing with one another to raise revenues to the government by enhancing costs like that of spectrum. The growing revenues to the government from this sector had not been spent for promotion of broadband for all educational institutions and public facilities like hospitals, railways, and bus terminals. Nearly 20,000 crore collected from the P-telcos as Universal Service Fund is lying unutilized. Even if a quarter of this had been spent to promote R&D, we would be having an indigenous design, development, and production for telecom and IT equipments instead of imports of about 40,000 crore for this sector.
Raising revenue and adding it to the general budget to be spent on populist welfare measures is no virtue. Enhancement of spectrum charges can have a redeeming feature only if the additional revenues to be raised are utilized only in the telecom sector for R&D and for extension of broadband to all over India. Patriotic citizens must be concerned with the grievous neglect of internal security, defenses of the country, and infrastructure like roads and educational institutions because the rise in revenues are wasted by distributing much of it for questionable ‘welfare’ schemes like NREG, old age pensions, 1 per kg rice, fee reimbursement, waiver of loans, (no interest loans to women (written off before elections). Fifty to eighty percent of the money spend as ‘welfare’ is transformed into black money, shared between businessmen, government servants, and politicians. Therefore patriotic people and institutions like the regulatory bodies should not be too eager to generate revenues for squandering by the populist governments.