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Corporate Mar 6, 2013

RIL’s new hungama: GSM players say govt favouring co in 4G

By Rajesh Pandathil

Ten years after Reliance Infocomm's Reliance Monsoon Hungama scheme brought about a revolution in the Indian telecom space and kicked up a storm with allegations of its backdoor entry into mobile telecom space, Reliance Industries is finding itself in pretty much the same situation now.

GSM operators body COAI has charged the telecom department with trying to give "undue benefits" to Reliance Industries by allowing companies having Internet service provider licences to offer voice calls by paying a small fee of Rs 1,658 crore each.

"We are greatly concerned and distressed by the unfolding of events on the attempts on the part of DoT to give undue benefits to a set of private parties, in this case RIL... under the pretext of migration of Unified Licence," a PTI report quoted COAI Director General Rajan Mathews' letter to Telecom Secretary R Chandrashekhar.

However, the RIL spokesperson could not be immediately reached for comments, said the report.

Inter-ministerial body Telecom Commission has approved a recommendation that allows companies having ISP licences and holding 4G spectrum to offer phone calls services by paying a fee of Rs 1,658 crore each.

The Telecom Commission's decision, if finally approved by Telecom Minister Kapil Sibal, will allow companies like Mukesh Ambani-led Reliance Jio Infocomm (RJI), Augere and Tikona Digital, if they want, to offer mobile phone service using BWA spectrum that they won in 2010 auction.

GSM operators body COAI has charged the telecom department with trying to give

GSM operators body COAI has charged the telecom department with trying to give "undue benefits" to Reliance Industries by allowing companies having Internet service provider licences to offer voice calls by paying a small fee of Rs 1,658 crore each. Reuters

The Cellular Operators Association of India (COAI) saidthe choice of using BWA spectrum under a given licence was to be exercised by an operator at the time of participation in auctions in 2010.

"By proposing a change now, the DoT is proposing policy changes in order to selectively favour and benefit a specific operator," it added.

The industry body said BWA spectrum was offered andacquired in 2010 under ISP licence on the basis that it cannot be used for voice services.

"Any effort to retrospectively review the same to grant an enhancement in the scope of service will be illegal as the conditions of auction are legally binding," COAI said.

It added that the charge of Rs 1,650 crore was relevantonly till the start of auction of BWA in 2010.

"Introduction of unified licence or payment of Rs 1,650 crore should not be allowed to be used as a via media to sidestep the explicit condition of auctions and attain a backdoor entry into voice services," COAI said.

Parallels with 2003

According to a report in the Economic Times, there are clear parallels with the situation in 2003.

The government should have earlier on made it clear that the broadband wireless access spectrum could also be used for voice services, former VSNL Chairman B K Syngal has told the newspaper.

"... This is another classic instance of Reliance being past masters at engineering backdoor entries, which they did so successfully in 2003," he has been quoted as saying in the report.

With the allegations, the COAI is joining ranks with its arch rival Association of Unified Service Providers of India (Auspi), CDMA operators' body, the report said.

Auspi had earlier termed DoT's decision as "unfair" and alleged the government had sold 4G spectrum at low price as the idea was to allow only data services on this band, according to the ET report.

Flashback 2003

The COAI's allegations are a dj vu for RIL. In 2003 too, Reliance Industries' telecom entry was riddled with controversies.

Reliance Infocomm, which had got a fixed line operator licence for more than Rs 400 crore, was offering telecom connections through wireless in local loop (WiLL) technology on the CDMA platform, which allowed the company to provide limited mobility to the fixed lilne connections.

The move was opposed tooth and nail by GSM players as they thought fixed line operators like Reliance Infocomm and Tata Teleservices are gaining a backdoor entry into the mobile telephony space by using WiLL.

Though WiLL could not be termed a mobile service completely, it had the advantages of a mobile service. The technology used by Reliance Infocomm to transmit signals was the same as the one used by mobile service providers. In other words, Reliance Industries took advantage of technology to gain entry into the mobile service.

There were allegations that the government had deliberately created confusion about the usage of signal transmission technology, thus allowing Reliance to gain entry into the mobile telecom space.

"Reliance Monsoon Hungama", the scheme launched by Reliance Infocomm, then part of the undivided Reliance empire, had kicked off a telecom revolution in the country.

The scheme had bundled handset with a cellular connection at just Rs 501. The aim was to lower the entry barrier and "give every Indian a chance of owning a mobile phone".

And, not surprisingly, within two days of launching the scheme, Reliance Infocomm got 2.5 lakh connections, according to this report in ET. The number was equivalent to other bigger players' subscriber addition in a full month, the report said. In a very short span of time, the company managed to garner 3 million subscribers.

Reliance Industries is aiming to do almost the same in 4G too.

According to media reports, Reliance Industries is set to partner Samsung to offer smartphones with long-term evolution (LTE or 4G) technology that bundles data and voice at about Rs 5,500 apiece.

This will bring about another telecom revolution in India and of course, as is evident now, along with it controversies.

by Rajesh Pandathil

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