Get ready for higher data charges

Get ready for higher data charges

The quality of mercy is twice blessed, said the poet, ‘It blesseth him that gives and him that takes.’ If we apply that yardstick to the Supreme Court’s verdict allowing telecom companies (telcos) 10 years to pay their outstanding adjusted gross revenue (AGR) dues, we would see that it does not quite drop ‘as the gentle rain from heaven upon the place beneath’: the consequence of the AGR verdict would be to let the telcos survive but force them to raise tariffs and extract additional charges from consumers for the data they consume.

The verdict raises some key questions. When the government, the aggrieved party who is owed money, was willing to accept the payment over 20 years, why did the court foist a shorter payment period on the telcos? Who on earth gains from straining the already strained finances of telcos? How does personal liability of directors for payment of dues gel with the principle of limited liability, on which companies are incorporated? Mercifully, the court refrained from reaching an impetuous conclusion on whether spectrum can be treated as an asset owned by a telco when it undergoes insolvency resolution, leaving that to the National Company Law Tribunal to decide.

When a company has won the right to use spectrum for a finite period by agreeing to pay the government a certain amount determined through competitive bidding, why should that right not be treated as a corporate asset on par with other assets of the company, subject, of course, to the dues payable on that asset being paid by whoever purchases that asset? The trouble is that the government has imposed two streams of payments on a telco for its spectrum: one, the spectrum allocation charge payable in a staggered fashion over a number of years; two, a high share of the revenue as licence fee and spectrum usage charge.

The high revenue share for licence fee and spectrum usage was justified when the spectrum was allocated administratively, bundled with the licence, but not after auctions were introduced. It is the government’s greed that will make data expensive in the days to come.