Murder: How an industry was systematically killed

The great Government of India has killed the telecom industry with such astounding brutality that it deserves special applause.

A bit of background - the telecom industry is somewhat special - to survive, it needs spectrum, which (like the Reliance D6 gas) is a national resource. A lot of players invested a lot of capital and took huge risks to start the industry from scratch in the 1990s. Just when they reached the end of the long investment cycle (10-15 years later!) and should have sat back to earn their returns, the government of India jumped in and started killing them.

First, in Jan 2008, the (dis)honourable minister for telecom suddenly changed rules midway and said that more operators would be allowed in the industry. This, despite the law saying categorically, that new licenses would NOT be given out. The incumbents, who should have got more spectrum by law, were now told - sorry! you will not get any more. We will give it away (almost for free) to friends and cronies (who by the way are going to make millions of $$s selling this spectrum to the likes of Telenor, Etisalat etc etc, without investing a single rupee of their own. Sorry, correct that - they are going to bribe me, the honourable minister, so that I can get a nice little fund going in my Swiss bank accounts.) Also, I'm going to keep an arbitrary date for consideration of applications for spectrum, so that ONLY my friends get this spectrum AND I'm going to change the rules on which incumbent gets spectrum first.

As a result, Reliance Communications, which by law was last in queue to get spectrum, will now jump to #1 position.

In any other country, this would have led to corruption charges against said minister, and he would have been in jail. But thanks to our strangely perverse country, the minister not only thrives, he actually got a second term in the government of the supposedly 'clean' Mr. Manmohan Singh despite a huge uproar on the blatant theft of revenues that should have accrued to me, the mango man of India.

The result of this was that fly-by-night operators came in, the industry got screwed because of irrational pricing, call quality suffered and investors got punished.

But the honourable minister had only begun. He now says - ha ha! you incumbents - you had the temerity to oppose my despotic theft - I will make you suffer more. So he says, retroactively AGAIN changing the rules - I am now going to arbitrarily decide that spectrum above 6.2 MHz (which I gave you 4-5 years ago for the same price that the new guys got it for) will now be priced at rates determined by the 3G auction (or more than 10-12 times what the new operators paid for their spectrum just last year). I will, perversely enough, not charge anything from the new operators. The losers, not surprisingly, are Bharti, BSNL, Vodafone and Idea. Reliance Communication, not at all surprisingly, totally not affected by this decision.

The incumbents today are large, respected companies not because they bribed thieving ministers and bureaucrats. They have built companies painstakingly, putting to risk large amounts of capital, effort and resources, and believing in the law of the land and principles of justice. To see them being systematically killed is a matter of shame. Strangely, perpetrators of this murder continue to line up their bank balances and enjoy their positions of power. But such is life in our country.