2G case: MPs complained about existing telecos: ex-TRAI chief

The Prime Minister's Office had in 2008 referred to DoT a letter of an MP complaining of "oligarchic conditions" in the telecom industry where four existing players were "fixing" the rules and controlling it, ex-TRAI chairman, Nripendra Mishra today told a Delhi court hearing the 2G spectrum allocation scam case.

"The MP had observed, inter alia, (in the letter) on the oligarchic conditions prevailing in the telecom industry. He had also observed that three-four operators were controlling the industry," he said adding he was not sure whether the four companies referred were Vodafone, Airtel, Idea or Aircel.

"In the second paragraph of this letter, it was also complained that existing players have managed to fix the rules, so that new entrants cannot enter.

"It was also complained that the threshold for new telecom entrants have been raised to high that no new company can come and offer cheaper services," Mishra, who was deposing as a witness, told Special CBI Judge O P Saini about a letter by Rajya Sabha MP Laljan Basha.

He also said a Lok Sabha MP from Kerala Abdulla Kutty had in 2008 raised the issue of tariff hike by Airtel, Vodafone and Idea on which MRTPC was asked conduct a preliminary investigation.

Mishra said the February 17, 2008, letter was referred by PMO to Department of Telecom (DoT) which had forwarded it to Telecom Regulatory Authority of India (TRAI) for its comments.

He said Basha, Rajya Sabha MP from Andhra Pradesh in 2008, had requested the Prime Minister to consider how to reduce the threshold for new entrants.

Mishra said that on the letter referred by PMO, TRAI had commented that to ensure level-playing field for the existing telecom operators and new entrants, its 2007 recommendations had called for keeping the entry fee for spectrum allocation at the same price as fixed in 2001.

"Keeping in view the objective of growth, affordability, penetration of wireless services in semi-urban and rural areas and the principle of level-playing field and opportunity for equal compensation between the incumbents and new entrants, the Authority recommended the same entry fee as was taken from the fourth cellular operator for grant of UAS licence in the year 2001," he said quoting TRAI's comment.

During his day-long cross examination by the counsel for R K Chandolia, ex-private Private Secretary of former Telecom Minister A Raja, Misra answered a range of questions regarding the pricing of 2G spectrum licence, TRAI recommendations and allocation of spectrum in 2008.

He said TRAI had recommended keeping the entry fee at 2001 rates as the "consideration of level-playing field is important between public and private companies and also among private companies who may have entered at various time intervals".

"It is correct that the new incumbent will not have the same advantage which the existing operators have. In 2007 recommeendations, the Authority had tried to ensure level- playing field between the new licencees and the incumbents," Mishra said.

"It is mentioned in the preface that the recomendations take care for potential rivals to get into the market and the Authority was also concerned about maximising the welfare of the consumers, healthy growth of telecom and financial viability of the telecom companies.

TRAI believed these objectives were fulfilled in these recommedations," he said.
Mishra said liberalisation of Indian telecom market and effective policy and regulatory framework were the major factors behind the growth of the sector.

He told the court that open competition in telecom sector was introduced in 2003-04 when six to nine service providers were operating in the country and some more had applied for the licence.

"The main issue that needed consideration related to determining the optimum number of players to be permitted to operate in a particular service area or to leave it for the market forces," he said.

Mishra told the court that the response of the industry on the issue was "on expected lines" and the incumbent players did not favour a free entry and those seeking entry into the sector were against putting a cap in the number of service providers.

During his cross examination, he also referred to the fact that at the time mobile penetration in Pakistan was 30.17 per cent, which was much higher than that of 16.3 percent in India.

Mishra's cross examination remained in-conclusive and would continue tomorrow.
Meanwhile, the court granted exemption from personal appearance, for the day, to DMK MP Kanimozhi, an accused in the case, to attend the budget session of Parliament.

It also granted exemption from personal appearance to Director Swan Telecom, Vinod Goenka, Reliance ADAG official Surendra Pipara and Director of Kusegaon Fruits and Vegetables Pvt Ltd, Asif Balwa on account of legal proceedings in Mumbai, medical ground and business related work respectively.