The steeply sloping playing field

The official demand for returning the money paid by the government telecom arm, BSNL, for third-generation (3G) spectrum (turned down, for now, by the Union finance ministry) is an illustration of why the state should be kept well away from running a business — it is not possible to be both player and umpire. BSNL was actually given the 3G spectrum free two years before, while private players were told they’d have to bid for these at an auction. The early start to the government side was excused on the ground of public interest and a promise that when the auction happened, BSNL would be asked to match the winning bids. The auction took place only recently and BSNL duly paid Rs18,000 crore, in line with that promise. Then, just weeks later, first the BSNL management and then the communications ministry decided the money should be returned, since the poor thing was shouldering social obligations and couldn’t afford to pay. In this column, we’d noted this argument was untenable on factual grounds. And, recalled that the same argument had meant BSNL was earlier absolved of any payment of entry fee for a cellular licence and also in paying for the earlier-generation (2G) spectrum.

Now comes a threat from all the BSNL staff unions of a nationwide strike from September if the money isn’t returned promptly. Their argument: it is unfair to be made to pay for 3G, since BSNL was deprived of an opportunity to choose where to bid! That shows the contempt they have for facts and grasp of these: BSNL was allotted 3G wherever it operated, without payment, in a field free of competitors, on a promise that it would be made good later. Do you need any more illustration of what happens when you allow the state to be both umpire and player? These people, unable to compete, demand a right to be so protected, in their jobs and as a privileged organisation; if they still can’t handle the situation, they will have the rules changed midway. All in the name of public welfare and the public interest. Bear in mind, too, that the telecom revolution — of universal access to cellphones and the internet at a rate everyone can afford — is not a creation of the government monopoly. It began to happen when that ended. The mentality which kept that state stranglehold in place rules still.

For the full editorial piece in the New Indian Express, click here

This says it all. And, I'll say it for the nth time - the government has the more important function of facilitation and regulation to perform, and when it becomes a player in addition, its functioning as the facilitator and regulator gets adversely affected.

Muralidhar Rao