GOVERNMENT: Which Mess Do I Clean up First?

As the head of India’s public sector disin vestment efforts, Arun Shourie

has just one big task–giving away government control in PSUs in a way that

benefits all stakeholders. And despite all the complexities involved in the

process, and the pulls and pressures from all quarters, Shourie proved himself

quite successful. Even his staunchest critics agree to that. However, will it be

the same for him in his new role as union communications minister? While no one

can question the fact that Shourie represents an endangered species of ministers

known for their integrity, transparency and above all, deeds not words, the

world of Indian telecom is most likely to throw up more complex challenges for

him.

For one, Shourie’s predecessor Pramod Mahajan has not left an heirloom that

would generate envy. Allegations of favoritism have been flying thick and fast.

Perhaps no other country in the world has a telecom industry as mired in legal

wrangles as India. Moreover, shenanigans of politicians and murky corporate

rivalries have been too overwhelming in the sector. Worse is the fact that TRAI

is not seen as an independent and effective regulator but as an appendage of the

government that is often subjected to ministerial whims. This has resulted in a

situation where operators have been spending more time on regulatory and legal

issues than on fine tuning their business. The end result has been low investor

confidence.

Perhaps Shourie has been well aware of all this. That is why he began his

innings at Sanchar Bhawan by assuring full transparency in all decisions and

deals and asking corporate lobbies to stay away from influencing the government

decision making. Given his reputation, that would not be a tall order. However,

as competition intensifies in the industry, given the reputation of some of the

players in the game, Shourie would have to live with lots of pulls and pressure.

Shourie must begin with strengthening the regulatory edifice by restoring the

credibility of TRAI and giving it more teeth so that it can act independently

and impartially in times of need. There is a need for reconstituting the TRAI

and getting professionals in the body. But before that Shourie must get the

Communications Convergence Bill passed with amendments to make TRAI really

autonomous and independent.

There’s also a need to remove the confusion with regard to the proposed

merger of BSNL and MTNL. He has already said that he would be studying the

proposal to merge the two state-owned companies. Shares of MTNL have jumped

since he took over from Mahajan as communications and information technology

minister. The company’s shares had taken a beating after Mahajan had said the

two companies would be merged.

The new minister should also ensure that there is no further erosion in the

value of BSNL and MTNL, and they remain competitive. An unhealthy BSNL or MTNL

is neither in the interest of the country nor that of the industry. At present,

ad hoc moves rule the roost in both the organizations. They have not been

aggressive enough in taking on the competition.

It is ironical that while on one hand the government has often been

vociferous in its support for ‘affordable’ mobile, its own operators have

been lying low on this front, thus doling out Reliance and Tata Indicom a major

advantage.

While several issues will be competing for the new communications minister’s

attention, four of them demand urgency. These are: raising of the ceiling on FDI

in telecom services; unbundling of the local loop owned by BSNL and MTNL;

pushing broadband access as a matter of government policy; and promotion of

rural connectivity. Removing the bar on foreign investment is essential in

context of the fact that restrictions make the cost of capital high. A delay

here could prove detrimental to the growth of the industry as it requires

massive investments. Unbundling is important from the standpoint that it could

not only bring in moolah for the state operators but also foster competition.

Broadband is important for the success of e-governance. In fact, both MTNL and

BSNL should be encouraged to take broadband to as many homes as possible. As for

rural connectivity, the minister has already made his mind clear that operators

who run way from their obligation would penalized. However, he would do well to

expand the scope of rural connectivity beyond VPT and look at ways and means of

bringing a more comprehensive access to rural areas so that the benefits of

connectivity with regard e-governance, access to new markets and education reach

rural homes.

Ravi Shekhar Pandey