Spectrum auctions a means to Digital India or else?
The entire auction process—right from the determining of reserve prices to the amount of spectrum that was put on the table or the aggressive bids that telcos went for—shows one thing very clearly. That, the stakeholders have not learnt their lessons from the past.
Operators seem to have got drawn into committing the same mistake they did earlier, in 2009, when the first 3G auctions had taken place in the country. They have bid more than they could recover, at least even in the medium term.
Spectrum isn’t an end in itself, but operators seem to be thinking it is.
And how about the government? Does the haul of over one lakh crore rupees help it significantly? It probably does, in the short term, but in the long term, it could defeat some of the bigger objectives that have been close to Prime Minister’s heart (read the Digital India program).
That the last mile access is critical to the success of the Digital India program is well understood. Also, in India, the de facto last-mile is mobile. In recent times, concerns have been voiced that the quality of mobile services has been coming down across the various networks. Often, a lack of sufficient funds is cited as the reason for the slowed pace of investments being made in mobile networks.
Now, with the operators bound to sink further in debts, it is likely that network investments will be impacted even more. State Bank of India has already expressed concerns over extending more loans to the telecom sector, which mean that even if funds come by, they would likely come at high interest rates.
This makes for the beginning of a not-so-virtuous cycle for India’s telecom sector—and as argued, even for the big-picture government programs like Digital India.
These views were first published on ET Telecom.