 Hello and welcome to NewsClick. The cabinet has really relaxed the spectrum holding limits and has also allowed more time to the telecom companies to pay for the wavelengths that they buy during the auctions. To discuss the issue, we are joined by Praveepur Kaisthau who is editor-in-chief of NewsClick and has also been working on these issues for more than three decades now. Welcome to NewsClick, Praveep. So what does this entire decision imply that they have relaxed the spectrum holding limits and they have, I think, moved the cap to somewhere around 50 percent? Well, there are two sets of issues really related to what the cabinet has decided. One is what directly affects the government revenue and how the spectrum was auctioned. The spectrum was auctioned on a certain basis in which it was said that you will get ten years, including two-year moratorium, to pay the spectrum fees with a certain upfront payment that you would have to make. So the auction price was fixed on these terms. Now the question is if you relaxed the auction term now to 16 years, then you are changing retrospectively an auction that was done in which different players had quoted based on what were the then existing terms. So this is a retrospective, a change of an auction which was done. And does the government really have the authority or the legal, shall we say, ability to make these changes? Because this to me is a legal issue that the government cannot retrospectively change what it had originally auction on certain terms because that makes the auction itself different than what it has now been fixed as. So I think that is a larger issue that remains. Yes, this issue had also come up regarding when we talked about the revenue share from the auction fees and that time we as Delhi Science Forum had questioned this decision of the government to change from revenue share, change to revenue share from direct license fees, which is what was supposed to have been paid upfront. And at that time the court really did not give a decision on this. We had approached Delhi High Court. The case was never really decided because even today I feel one of the reasons it was not decided because the court felt what we were saying made sense. But at the same time given the government had already proceeded on this lines therefore they did not want to really upset the apple card. So that still remains a legal issue changing retrospectively the auction terms and conditions. The second issue which you are raising is really with respect to the spectrum limits. Now here two things have been done. One is that the spectrum limits have been changed for each circle and I will come to that in a minute. And then also the total spectrum holding that you can have that has also been changed that has been raised from 25 to 35 percent and the spectrum holding in a circle which was in each band it could be maximum of 50 percent. Now it has become a combined 50 percent limit for all bands less than 1 gigahertz but it combines all the spectrum bands and then sets a 50 percent limit. It also makes it the limit in a way that it seems to specifically favor two players. One is the Vodafone idea merger that is taking place in which five circles had come explicitly under this band because the combined band was more than what was allowed for earlier and therefore they would have been forced to let go of that spectrum. So that has now been changed because it is across the country not for each circle therefore it allows obviously the ability to go beyond what was originally there. The second part of it is the sub gigahertz. Again this is if you for instance came up against the 50 percent circle limit with the Vodafone idea also would have come. The same issue applies also to Geo because Geo was buying RCOM band and again they would have been forced to let go some of this band in some circles or in the 850 megahertz band because 850 megahertz band was where the problem lay for them that RCOM also had spectrum in that band. So what is done by combining the sub one gigahertz bands so it has helped Geo. So it has helped by removing the circle band it has helped Vodafone idea merger and by combining the sub gigahertz all the bands it has specifically helped Geo. So these are seems to be very very specific measures to help specific companies and this creates in that sense a much bigger monopoly than what had what had held earlier. We must understand all these were put in place in order to help the consumer not to face monopolies. What this has done is really created much larger monopolies and that is not good in the long run for the consumer. So the cabinet is also saying that this will also give boost to the industry which has somewhere around 7.7 lakh crore of debt. Do you agree with that statement that the cabinet is making? Let us put it this way what is the really what the 7.7 lakh crore debt really mean and again there are questions on this because I saw the ICRA figures say claim that's 4.7 lakh crore debt. So we really don't have a clear understanding of the debt unless the Reserve Bank makes known what the individual company's debts are which it hasn't done till date as you know because this issue has come up again and again regarding NPS, bad debts and so on this is held to make a commercial secret. So we don't have we not privy to what the debts really are assuming it's 5 to 7 5 to 8 lakh crore debt. So this debt gets relieved in the following way that instead of having to pay for license fees over a 10-year period now you're going to be paying over a 16-year period. So you pay less and then from the revenue you get you're likely to have a better balance in terms of the inflows and outflows so you're in a better position to also pay back your bankers. So this is one part of the argument now other argument which the industry is giving that this is not good enough for us we also want an interest being lowered. So now that of course is the industry's always claim that they are so badly distressed that they all all kinds of goodies have to be given to them no monopoly restrictions which is what the government is given in changing of the terms of the payment and also lowering of interest rate. The government at the moment has not lowered the interest rates because it also faces the issue that the banks are stressed in the banks are stressed reducing the interest rates essentially penalizes the banks. So this is the other part of it but yes one of the reasons that these companies are in debt is the fact that they actually paid license fees at a time when they thought that they will be able to recover all of it from the consumers. What really happened that this was a in in fact one of the fallouts of the 2G issue 2G scam if you will is Rajas giving out 2G licenses in small slices of spectrum did also make the viability of the sector more at risk and that is one of the reasons these companies then have not been as successful as a thought they would and later on they did not invest essentially in the infrastructure which what which is what they really required to be able to use their spectrum more efficiently and generate more revenue. So they did the short shall we say short-term measure of lowering prices but not putting in the investments and today therefore the only company which is coming with fact shall we say fact of wallet is Geo because it has so much money from the reliance gas oil other other monies that it controls it's able to bankroll for for the short term at least a huge expansion of infrastructure and because it's able to bring in that amount of money and with relatively much less burden of debt on it that it is really become a big threat to the existing players and that's also the reason Geo has said all this thing should not have been done only thing they should have been done was to remove the restriction of the bandwidth so the 16 years business they know they're not happy with because it increases competition for them so I would say the government is now moving not in terms of looking at what the sector really needs from the point of view of the consumer but it is looking at what the sector needs from the point of view of only the players that exist in the sector give them various benefits without any need to pass on those benefits to the consumer so we are likely to see a much stronger shall we say monopolies emerge in the sector this question of mergers et cetera that will take place because all this removing of bandwidth limits is going to force more mergers so we will say probably two three monopolies emerge which would control the market and then you would get the cartilization take place which has been already something that existed which to some extent because Geo came in with the new technology using the 4G making the voice free all of these measures by which he changed the terms on which the industry was operating now you are going to probably see at some point a shake up of the industry and then an agreement with all the incumbents to fleece the consumers because this is what really monopoly at the end would mean that's all the time we have for news click today and as these things proceed we'll be coming back to you on such issues keep following our website and our facebook page thank you