Home & Office

'Mistrust' mars Indian govt-telco relations

Government ruling outlawing telcos' sharing of 3G spectrum will break up their pan-India service coverage, and has exposed the dysfunction that exists in one of the world's biggest telco markets.
Written by Mahesh Sharma, Correspondent

The Indian government wants to abolish the practice where telcos share their 3G spectrum with competitors, a necessary arrangement in the country where no single telco owns licenses that would allow them to service the entire country.
For example, in the state of Karnataka, which capital is Bangalore, Vodafone only has the license for 2G spectrum but provides 3G coverage to subscribers via the Bharti Airtel network.

According to reports on Thursday in The Economic Times, the Delhi High Court issued a stay order on the clause introduced by the Department of Telecommunications regarding the license agreements with telcos. The department had decreed 3G roaming agreements to be illegal and ordered telcos to terminate such agreements. 

Idea Cellular brought the action against the government, which has a month to respond to arguments that the practice was permitted under the original license terms, and allowed to continue for the past year.

In an interview with ZDNet, Sridhar T. Pai, CEO of analyst firm Tonse Telecom, said a short-term legal action would not address the industry's systemic problems. "The operators are thinking, 'the government screws us all the time.' The government thinks, 'these guys made so much money in the last 10 to 12 years, why don't they pay more taxes?'"
Pai explained these issues could have been resolved through meetings between the government, regulators, and telcos, but noted that "fundamentally, Indian telecoms is an environment of mistrust".
The analyst said the "gentleman's agreement", which emerged in 2010 at the 3G bandwidth auction, was an innovative market solution to a botched 3G auction process, but subsequently led to a poorly defined roaming policy. "At the auction the government did not consider the possibility that people might not bid because the prices were too high," he said.
He believes selfish telcos, which ignored less profitable markets, are also to blame. "[The telcos] brought in top consultancies who just advised them to keep bidding higher in the most profitable circles," pointed out Pai.
On March 12, The Hindu reported that telcos would stop providing 3G services in circles where they did not own  spectrum. The government would also fine operators that engaged in the practice. It noted that "commercial roaming arrangements" would eliminate the need to bid for spectrum or build network infrastructure in a particular circle, according to the report.
"Companies with the license to provide [3G] mobile services will not establish any kind of network to provide the services, and may not bid for spectrum during the auction process," The Hindu quoted a draft notice to be issued to Bharti Airtel, the country's biggest mobile company.
The Indian government added that telcos were operating as "mobile virtual network operators", which was illegal.

Editorial standards