Financial Daily from THE HINDU group of publications
Friday, Sep 13, 2002
Industry & Economy - Industry Associations
COAI finds `unlimited' competition call jarring
NEW DELHI, Sept. 12
THE Cellular Operators Association of India (COAI) has objected to the Union Communications Minister, Mr Pramod Mahajan's statement that he was considering allowing unlimited competition in mobile services across the country.
In a strongly worded letter to the Minister, COAI noted that if more players were allowed into the sector (at present only four operators have been given the licence in each circle), it would not only be a violation of the New Telecom Policy '99 but also the TRAI Act and the licence agreements signed by the existing operators with the Department of Telecommunications (DoT).
"The NTP '99 is abundantly clear on the process and timing for introduction of additional competition in the cellular sector. The policy recognises that spectrum, which is the key raw material for cellular mobile services, is a finite resource and this resource must be used to provide optimal bandwidth to existing operators before considering the entry of more players into the market," it stated.
In this context, it noted that the fourth cellular operator for Delhiwas awaiting allocation of spectrum to be able to commence services even after one year with investments to the tune of Rs 800 crore lying idle.
In addition to the availability of spectrum, NTP '99 also provides for due process to be undertaken by the regulatory authority to determine the need and timing for the introduction of more operators.
It would be incorrect, arbitrary and illegal for the Government to bypass the duly laid down statutory process, it said.
The association noted that the introduction of additional operators in the cellular mobile services sector must be in full consonance with the provisions of NTP'99 and the statutory process laid down by TRAI Act and must be dictated by availability of spectrum, best interests of consumers and business viability of the industry.
Consumer interest is best served by ensuring free and fair competition in the market in an orderly and phased manner.
Even in the current competitive environment, the industry was operating far below costs and incurring huge losses. Introduction of more players in such an environment would only serve to severely fragment the market, resulting in unviability of businesses and inevitable sickness and collapse of a sector, it said.
"We believe that the primary role of the Government is to ensure a stable policy regime and to create an environment where the regulatory mechanism is free, fair and independent. It is only then that the sector will be able to productively contribute to the growth of telecom services and the achievement of the telecom objectives of NTP'99," the
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