From 2G to Jio: The Last Laugh in Telecom

The truth, as they say, is complicated.

The Last Laugh in Telecom
The Last Laugh in Telecom

The free offer by Reliance’s Jio was a scorched earth strategy that sent all but Airtel and Idea/Vodafone to the cleaners.

When the Congress and DMK raised their voices to fill the headlines with the vindication established by the CBI special court, it is pertinent to remember that almost every party in our country raises funds for their parties through illegitimate means. It is the reason reform in electoral funding remains a high on agenda point. The lack of earnestness in claims of propriety from all sides must not be lost in the noise of politics.

What differentiates the South Indian politicians, who seem to be easier to expose, than their counterparts elsewhere – is the South Indian propensity to keep their books in order even while committing fraud.

Raja obviously sought to sell spectrum cheap to Unitech & Swan so that they could trade it for a hefty profit – and pocketed a cool Rs. 200 crore for his party fund in the process. STel had sought the same spectrum out of turn earlier at higher prices so that arbitrage opportunity was obvious. The moment the CBI investigation began, Kalaignar TV arranged to refund the Rs. 200 crores with interest, again ensuring that their books were in order.

It was obvious that the BJP would seek to make amends and score political browny points by going through a transparent auction process.

But the subsequent cancellation of licenses and the money trails left in their wake leave a story – whose legal tenability we can leave to the higher courts to decide. There is always a gap between the truth and what can be proved in a court of law.

The Congress claim the goal of their government was not revenue maximisation but to increase teledensity by keeping spectrum costs low. As a general principle, that is hard to contest. However, when the STel application made the market prices of limited spectrum clear, it is hard to justify intervening in the play of market forces to deflate and selectively sell spectrum through an orchestrated process with a transparent kickback to boot.

The twist in the tale is that the current mess in the Indian telecom market was served a death knell by Reliance Jio.

After all this hullabaloo, it was obvious that the BJP would seek to make amends and score political browny points by going through a transparent auction process. Prices were driven up here by market forces, which are often irrational while traversing the risky Indian telecom landscape that precedes the once in a generation pot of gold at the end.

But the twist in the tale is that the current mess in the Indian telecom market – though influenced to some extent by high 2G/3G spectrum costs, was served a death knell by Reliance Jio’s relatively lower cost 4G spectrum based debut (cost advantages offered by a mix of technology, enterprise and realpolitik) .

The free offer was a scorched earth strategy that sent all but Airtel and Idea/Voda to the cleaners. As competition contracts, higher telecom prices will get normalized, teledensity could get affected and we would hum along in a new normal – our attention distracted by the multitude of other sensational curated stories from the perpetual noise of chaos that informs our democracy.

The truth, as they say, is complicated. We trade it for simpler headlines on a daily basis so that we can make sense of the world around us and live with the illusion that the order surrounds us.

Note:
1. The views expressed here are those of the author and do not necessarily represent or reflect the views of PGurus.

Prema Raghavan
Latest posts by Prema Raghavan (see all)

3 COMMENTS

  1. Why dont you investigate the JIO scheme iso blaming DMK and Congress. Also how they were able to
    offer services for 3 months I suppose. What is there to laugh. What did Mahajan do ditto he favoured
    Reliance. Tell it is true or not.

  2. There is nothing to laugh about here. The scam played into Jio hands – they could dictate pricing for 4g while Airtel and others were crippled with staggering debts due to auctions. Before MMS, Chidambaram and Raja stepped in to ostensibly open up competition, there were already upto 5 players in each circle. So the opening up to additional players is merely a scam to loot the public and fill political party coffers. The Indian public will suffer with degraded service for the foreseeable future. Nobody can now afford to roll out 5G – essentially Indians are now shafted and will remain thus for the foreseeable future.

  3. Excellent article. “Latest laugh” may be more apt, as the last laugh may be a long way off.

    Whether it’s in technology, business or politics, most planning is done based on assumptions that become invalid soon.

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