Anxious to prevent a repeat of the situation where former telecom minister A Raja allegedly rigged spectrum prices to favour a select group of businessmen, the Union Cabinet, which cleared the National Telecom Policy on Thursday, decided to vest the power to price spectrum in a ministerial panel, rather than just the minister. It also felt that revenue generation could not be excluded as a goal, borrowing the politically safe formulation of “affordability” from the New Telecom Policy, 1999. Deputy chairman of Planning Commission Montek Singh Ahluwalia had objected to the proposal to confer pricing power on the telecom minister of the day. The meeting saw him getting support from many of the attendees—home minister P Chidambaram, finance minister Pranab Mukherjee, rural development minister Jairam Ramesh, commerce minister Anand Sharma, heavy industries minister Praful Patel and highways minister C P Joshi.
The affordability argument can provide comfort to telecom operators who have launched a high decibel campaign against the regulator’s prescription for a 10-fold increase in the reserve price for spectrum auction. However, the government has virtually ruled out a rethink on the second suggestion of refarming of spectrum. The regulator has proposed that GSM operators switch from 900 MHz band to 1,800 MHz at market determined rates, something that is being opposed by the industry on the grounds that it will cost it nearly Rs 1.5 lakh crore.
On giving more powers to Trai—another issue which saw an animated debate in the Cabinet—the ministers were unanimous that policymaking function would remain with the government, not the sectoral regulator. “This means Trai will not make policy,” telecom minister Kapil Sibal said. This apart, there were at least two other modifications, with the telecom department dropping proposals to enact a separate law for spectrum management and to set up a finance firm for the sector.