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Elusive Rule Of Justice

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In the two-decade story of mobile licences in India, there have been four governments; none was clear about policy, so there were many experiments. They have resulted in an extremely complicated telecommunications market. The Supreme Court in its wisdom declared 122 licences issued in 2008 illegal. The cancellation left that many companies shorn of business, and their 80 million customers deprived of their mobile connections. It then asked the government to find a solution to the crisis.
The committee appointed by the cabinet for the purpose has recommended that the government should refund to the 122 licence holders the licence fees they originally paid, without any interest, unless they face criminal charges. It has also recommended that the current GSM operators should be allowed to keep 4.4 MHz and CDMA operators 2.5 MHz for free, and that they should pay a lump sum for any excess from the day the cabinet approves the decision. It makes no distinction between old and new operators; all that matters is the spectrum they want to rent. The rent would be charged from the day the cabinet approves the committee’s proposal.
This raises a number of issues. First, there is the proviso about criminal charges. Maybe there are criminals among the operators; more likely, the government or some private parties have at some point or the other filed cases against the companies under some act or the other which attract criminal charges. Whatever the charges may be, it is unlikely that any telecommunications company is accused of having murdered or injured anyone; the charges they may face can be criminal only because the government chose to term them so in some piece of legislation. Those charges are quite unrelated to the hundreds of crores of rupees the government deprived those companies of. Just because a company faces some charges, the government cannot take away its business and refuse to refund the licence fee it had paid.
There is also the minor question of refund of licence fees without any interest; just the kind of little robbery the government indulges in. If a taxpayer delays in paying his tax, it charges him 24 per cent. If he pays in advance or if the revenue department unfairly takes away his money, the government pays no interest. Fairness does not figure in the government’s rule book.
Next, the committee proposes giving all existing operators a modest ration of spectrum, and charging them if they want any more. The reason for giving them the free ration is that they have been in business for years and have millions of customers; it would be too disruptive to make them switch off customers’ phones. Small operators may be able to make do with the offered ration; the rest will have to come and buy more spectrum, irrespective of what they were hitherto entitled to. For one thing, there is no reason to distinguish between small and big operators; small ones are not necessarily poor ones, even if the government wants to demonstrate its love of the poor. For another, the government likes to impose lump sum penalties; it thereby creates considerable uncertainty in the market. It should abandon such arbitrary imposts, and change over entirely to a proportion of revenue. That way, it will benefit from the companies’ efforts to expand their business, which will become increasingly necessary now that teledensity has risen so high.
This principle is so important that it would be wrong to apply it only to new operators; it deserves to be applied to all operators. The Supreme Court expects the government to come up with a solution for only those operators whose licences it cancelled. But justice should not be done selectively; if share of revenue is the correct way of taxing the industry, it should be applied across the board. The Supreme Court has not always given judgements in respect to this industry that were obviously just; but if the rationale of share-of-revenue taxation is explained to it clearly and simply, there is no reason why it should not be convinced.
Finally, the Supreme Court has acted on the assumption that there is only so much spectrum available; the government has done nothing to disabuse it of this notion. But in fact there is no shortage of spectrum. The allocation of spectrum to the telecom industry has been entirely arbitrary, as is the government’s general spectrum policy. Much of the spectrum has traditionally been hogged by the armed forces, which need only a fraction of it even in war. It is time the government made them define their requirements more rationally; if the government is incapable of doing so, the Supreme Court should make it.