As if the government isn’t already under enough pressure to do something about the issue of telecom licences, in 2008, to companies on allegedly favourable terms, the Supreme Court on Monday admitted a public interest case seeking the scrapping of licences of those that have missed deadlines for rolling out their telecom networks across the country.
The apex court, given the justifiably activist position it has taken on what is called the 2G scam (the licences came with spectrum and were for second- generation, or 2G, mobile telephony services), is likely to seek answers to some tough questions from the government and the telecom regulator.
The department of telecommunications (DoT) has already started levying on and collecting from the offending telcos penalties for missing roll-out obligations, but there’s a chance that some companies could have their licences revoked. That is unlikely to affect customers— even if the telco is one that has started operations and has customers—because with the imminent arrival of mobile number portability, there are no barriers to moving from one network to another. But it could hurt banks if they have loaned money to these companies on the security of these licences. It could also put the government in a bit of a spot because DoT is a required co-signatory for such loan agreements.
India’s telecom market has evolved and grown (and how!) through a series of inexplicable policy changes and long-drawn legal challenges and there is no doubt that the business will survive the current crisis (and perhaps emerge stronger and cleaner from it). Monday’s development, despite the political and economic fallout it will surely have, is just another incremental step in the controversy surrounding the new 2G licences. Still, it reiterates both judicial and public sentiment that justice needs to be done in this case—something that could translate into an overwhelming demand for making an example of a telco. Only, in the Indian telecom business, it is a rare company that hasn’t run afoul of one regulation or another. The courts, the investigating agencies probing the 2G controversy, and the government, when it chooses to act, would do well to remember that. Put simply, a penalty will do in the case of some telcos, but only a cancelled licence will do for some others.
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