A court verdict in India
Nearly 50 million users will either have to quickly switch their services or they will be without a carrier.
An activist Supreme Court is something to be both welcomed and feared, as India is now finding out. At its best, judges who work in the public interest are keeping the government in check and ensuring it follows the letter of the law. But a Supreme Court which overturns legislation or cancels government contracts can also cause a great deal of disruption. The Indian Supreme Court’s decision to cancel 122 mobile licences issued four years ago, falls firmly in the latter category. Although the underlying justification — that the telecom minister did not follow the regulatory body’s guidelines in issuing the licences — is sound, the ruling could cause untold chaos for India’s mobile phone subscribers. Nearly 50 million users will either have to quickly switch their services or they will be without a carrier. The other networks will also have to instantly upgrade their services to be in a position to handle the expected new traffic. What is most likely is that they will pass this cost on to the consumers, leading to a steep hike in prices. Those companies which have now lost their licences and want to re-enter the market will have to rebid for contracts, essentially ending up paying twice to provide the same service.
The aim of the judges should have been to punish the government for not working within the regulatory framework rather than going after companies whose only crime was to work with the government. Fines and jail time for government officials would have been far more appropriate and wouldn’t have placed the mobile phone industry in such peril. India has built its economy, in part, by painting itself as investor-friendly, especially to those in the technology sector. With one ruling, the Supreme Court may have reversed years of progress (one major mobile operator, Norwegian company Telenor, is considering pulling out of India altogether). Winning investor confidence back could be an uphill task for the government, notwithstanding India’s sound macroeconomic indicators.
Published in The Express Tribune, February 4th, 2012.
So who has the most activist SC India or PAK. Which court is more respected India or PAK. Who would you rather hear your case India or PAK. Which SC is more independent India or PAK.
Who will pay for the damages if the companies affected go to international forums for arbitration? Ultimately,the money will have to be borne by the tax payers. The court's suggestins to auction national resources whichare scarce ,is not logical. Hospital beds are scarce in India,water is scarce. Should the government auction these also to the highest bidder?
I welcome the judgement of the Honorable court. This is a landmark judgement. Hence forth all the crooks and thieves would think not just once but multiple times before agreeing to be part of such shady deals. Many top honchos of telecom companies were jailed and were given bail recently. The then telecom minister is still in jail. And the daughter of the leader whose political party is the second largest constituent in the central govt was released only recently. Certainly good times to come. Good judgement for the avg Indian. we do not care if the call changers are increased. At least the loot was stopped.
It is a big setback for the government's credibility in the telecom sector which has been hailed as a "Telecom Revolution" as well as investors both domestic and foreign. An auction of the 2G spectrum might lead to the government getting higher revenue but it will lead to increases in call rates and hence a burden on the 800 million subscribers. (Right now India has the lowest calling rates in world). There is also the issue of old established players having got the spectrum free, where as the new comers will have to pay unusually higher price there by making the policy anti-competition and pro-incumbent and pro-monopoly etc. However your edit seems to imply that this judgement is against present subscribers of new players because they will be abandoned. But that is not likely. Already there is mobile number portability (MNP) in place so that any one can retain the same number even if he changes the service provider. More over the the government and the regulator have assured that the subscribers' interests will be protected on the issue of continuity of service. A 4 month transition period has also been given by the court for a new policy and new liceneces to come into being. regds SK Mumbai
Dear sir,
How can one explain upholding a unlawfull contract or act even though it sanctioned by GOI,Sir GOI of is sub-servient to the constitution of India and Constitution of India is for the people of India, also i am sure your aware that SC of India main duty is to uphold the constitution, their has been a voilation of law by the bribe giver and the one taking it, hence both shall be punished ,yes it will hurt Indian business environment but in the long run rule of law prevailed which is good for business.I would like to bring to your notice the judgement on Vodafone Tax issue which was given in the favour of Vodafone and aganist the GOI.
Both the above cases explain to my mind that rule of law still prevails in India, Indian courts do not ask PM of India to give in writing that he shall not dismiss a civil servant.
As for your contention that the SC of India entered into the policy of the executive, i would like remind you that the SC has judged the Wisdom of the policy it has only said that power be used corrupt practices to gain ,in this case both Telecom Operators and GOI.
Hence this judgement does not in anyway voilate the constitutional role of the Indian Executive.
The article misses one very important point. It is that the Indian supreme court made its ruling because it found the 2G spectrum allocations by the tainted ministers to be in viloation of the constitution. What the court has done is to enforce and uphold the constitution. It is the job of the supreme court to quash any anti constitutional actions by the government and the ministers. Supreme court verdicts can only be overturned by a new law passed by the parliament.
the telecom companies are hungry to tap the market of 1.2 billion !! its a long term investment which will make them super rich, so they would prefer to increase the customer base through cheaper prices rather increasing the price to gain short term profits !!
@gt: I agree with gt. Who needs Coca Cola or IBM or Bofors? Who needs foreign investments? We will fight Pakistan with indigenous kitchen knives and guns made in UP and Bihar.
I completely agree with ET. India will now be seen as a banana republic. Mobile is so cheap in India. 1/2 paise per second anywhere in India. Now this golden era will be dead. All the people writing in your comments are rich. They own a PC. for them it does not matter. But what about the ordinary person in cities and villages? We have 50 paise postcard for the poor (private costs Rs. 50/-), Indian railways charge Rs 125/- for 500 km. (private bus 800/-). Electricity is subsidized for the poor. Education is subsidized. Now Telecom should also be subsidized.
Completely disagree. The SCI said there was prima facie case that telecom providers who won spectrum in 2008 benefited from collusion with A. Raja (telecom minister who is charged with corruption). Raja changed the rules and preponed the deadline for purchasing the spectrum. Companies who succeeded were ones who knew of sudden preponement beforehand. There were other genuine buyers who were caught offguard due to date change and were unable to purchase spectrum.
To allow these winners to benefit by pocketing up to $40 billion of assets at throw-away price and losers to suffer due to corruption would be a travesty of justice. The court also instructed the Telecom Authority to manage the migration of subscribers allowing them 4 months to migrate, and for returning the fees paid by auction winners as it sees fit.
India would have only attracted investment from crooked companies if the court had sent message that profits from corruption can be pocketed. India is better off without such investment. 1/6 of the world's population is too attractive a market - inspite of confusion investors will line up to bid billions for re-auctioned spectrum. In a year the market will again have balance of old and new players and price balance will be restored. This was a victory for Indian citizens.
very well written- its quite relevant to us as well. After all we also have an independent and activist SC although its alleged of being active in particular cases.
Sir,
The attempt to "punish" the companies involved 4 years ago is because they are implicated beyond reasonable doubt of massive bribery, of essentially "purchasing" the governnment at the Center. Jailing government officials cannot be a solution, since it cannot really strike at the deep roots of the nexus. A minister here, or a senior civil servant there, become merely the scapegoats for a much deeper ill.
Hitting them where it hurts, their pockets, can be one way. The public is well aware of who did what and is able to selectively choose & reward the more ethical companies over the less. Whether Telenor removes itself from the Indian market is its own decision. I am sure that there are others in the world eager to fill the vacuum. That sort of threat cannot be any reason not to even attempt this measure! Coca Cola & IBM removed themselves from India for decades, for other reasons. No loss, as far as Coca Cola is concerned.
I disagree with the editorial. I welcome this move even if I have to switch my carrier for my new number or perhaps scrap the sim, given it's just 60 days old.
I understand that millions of poor are the ones severely affected by this. However, companies will think 10 times before entering into another nefarious deal in the future.
Indian issue on Editorial page; Thanks God we got rid of all our own problems.