02 May 2006

Intresting Column

Gurumurthy writes articles for Indian Express.This is today's article. In case you are not able to read it, here is the full article.

A Telecom Ministry that is run by Maran for Sun TV
Tuesday May 2 2006 10:37 IST

S Gurumurthy

The telecom world sees Dayanidhi Maran wear two hats: one, as the Telecom Minister; the other, as the Promoter of Sun TV. The Sun document offering shares to the public, issued few weeks back, introduces one 'Dayanidhi Maran' as part of the Promoter Group of Sun, and stops at that. But that he is also the Telecom Minister who as government handles Sun as a licensee is concealed.

The reason why the Sun offer document hesitates to say that the Promoter group member Dayanidhi is the Minister Dayanidhi also is obvious. In his dual role inheres an irreconcilable conflict between his constitutional position as the Minister of Telecom and his business interest in Sun. But this mix-up is no accident, and not because an ignorant Prime Minister gave him a wrong portfolio.

It was the case of tail wagging the dog in coalition politics. It was a pre-planned demand by the DMK --read the two families, Marans' and Karunanidhi's-- that Dayanidhi be made the Telecom Minister.

It does not need a seer to unravel why such a demand. For, all that the Sun TV would need from the government to promote itself and all that it needs to contain and even crush its competitors and others is vested in the Telecom Ministry, that is, Maran himself if he became the Minister.

This power to promote itself and to contain others did not remain idle. It was actively, actually put to use. This is the core of this investigation.

A flashback to how Dayanidhi Maran became the Telecom Minister is crucially instructive. The 2004 Lok Sabha elections lifted Dayanidhi Maran from an air-conditioned board room and landed him into dusty street politics. After the elections DMK supremo Karunanidhi forthwith entered into a secret deal with Sonia through her emissary Janardhan Reddy about who should be appointed ministers from the DMK and what portfolio be given to them. Dayanidhi's name figured prominently in the secret pact as the Telecom Minister.

This was long before the ministry was constituted. The DMK support to Congress was based on this secret pact. Karunanidhi embarrassed the Congress by disclosing the secret pact when he suspected that the Congress was rethinking on giving the Telecom portfolio to the DMK, that is, to Maran.

Surprisingly the ministry of Commerce held by the senior Maran who made India proud at the WTO meet in Doha was abandoned by his family. Sentimentally, Dayanidhi should have insisted on his portfolio. But these practical men knew that there was no room for sentiment in politics and business. With business considerations as the sole driver the Kanunanidhi and Maran families swapped Telecom for Commerce. Dayanidhi became the Minister of Telecom in May 2004. He was the CEO of Sun TV just days earlier.

To understand how critical the Telecom Ministry is to control the new economy it is crucial to decipher how important it is for Sun TV to control it through Dayanidhi. This Ministry rations among the users the new economy asset the radio frequency waves, called 'spectrum' in technical language, through which sounds which we hear in cell phones or radio and images which we see on TV screen are transmitted. All wireless users - whether radio stations or cellphone operators, TV telecasters or fast Internet Service providers --have to get the frequency allocated by Dayanidhi's ministry. In short, without licence from Maran's ministry use of wireless is not allowed in law.

The ministry's website claims: "The Wireless Planning and Coordination [WPC]wing of the DoT is the authority for spectrum management, including Licensing, and caters to the needs of all wireless users in the country". The Ministry further claims that WPC performs 'the statutory functions of the government' and 'issues licences' for 'wireless stations'.

The Standing Advisory Committee on Radio Frequency Allocation [SACFA] makes recommendations for spectrum allocation and use by all wireless-based businesses in the country. Spectrum rationing is the most potent power in the wireless-driven modern economy.

Cable TVs cannot operate without wireless license as TV programmes have to be first up-linked to Satellite and then down-linked, both through wireless, and distributed through cable to households.

The Maran apologists would say 'but TV business does not come under Telecom ministry; it is under Information and Broadcasting Ministry'. This is a red herring. The question is who actually dictates terms to the TV business in rationing Spectrum?

Information and Broadcasting Ministry is just a post office on Spectrum-related issues. It is Dayanidhi's Telecom ministry that solely controls and rations the issue of wireless licences for all uses, including TV transmission.

See how Dayanidhi exercises this power not as Minister but as just the Promoter of Sun TV. An instance in point is the Jaya TV case. It had asked for permission from WPC for operating a 24-hour news channel like Sun News. Jaya TV did not seek additional spectrum. It merely asked for more intense use of the spectrum already given to it. The approval should have been granted as a formality.

Jaya TV had applied for approval in May 2004 and it has not got permission till today, that is, for two years. Jaya TV filed a writ and the court told the government to decide the issue within a stipulated time. The Writ Petition cited how another channel 'Kairali' was given identical permission within days of application. [It is no one's case that if it had had the like chance the AIADMK would have treated Sun TV differently].

Jaya TV is a known enemy for DMK. But what about the Tata Group? When the DTH license application of their joint venture with Sky landed on Dayanidhi's desk, against all norms of propriety and Ministerial conduct, he kept it pending while his brother conducted a parallel discussion for Sun TV's entry into the joint venture; only after adverse media comment and pressure from the Prime Minister's Office was the Tata-Sky license cleared by his Ministry.

How about spectrum allocations for telecom service providers? The Standing Committee of Parliament attached to the Telecom Ministry has made serious adverse comments on Dayanidhi's handling of spectrum allocation to service providers, and the differential treatment of operators using different technologies, in its report of December 2005.

It is a matter of national concern whether a scarce resource like spectrum should continue to be given away free, but there has been no response from Dayanidhi to the proposal for pricing of spectrum, including one national player's offer of paying a substantial sum of Rs 1500 crores for the allocation of spectrum for 3G services.

Dayanidhi's proximity to certain players may explain his reluctance to take decisions that are in the national interest, and explain why the Prime Minister has finally been forced to constitute a group of ministers to decide on spectrum policy as the Telecom Minister's policy on spectrum had become a tool of favour and disfavour.

See how he bends policies for Sun TV related matters. Dayanidhi's conflict of interest as businessman and as Minister became more demonstrable as Sun TV began aspiring for all wireless businesses. This is because of technological convergence of different wireless activities. For example, TV programmes can be transmitted by cell phones and telephones can operate on TV connections. Likewise Internet can carry voice and also TV display. A bill for convergence of wireless licences is pending before government. So, in future, all wireless services will be complementary and therefore competitive. Therefore, Sun TV began to look for all wireless based businesses.

The changes in Sun TV business plans and the changes in the government policies went hand in hand. Sun TV floated two companies Kal Radio [on October 7,2005] and South Asia FM [on November 9, 2005] for entry into wire and wireless telephony and other services. Forthwith, drastic liberalisation of telecom policy was announced on November 10, 2005 by Dayanidhi's Ministry as if to welcome the Sun companies into telecom business.

Despite critical comment from the Finance Ministry, the licence fee for the National Long Distance telephone was reduced from Rs.100 crores to just Rs 2.5, yes Rs 2.5 crores (and this at a time when several telecom players were on the verge of taking National Long Distance licenses, which could have earned the public exchequer several hundred crores of revenue)! And the International Long Distance licence fee was reduced from Rs 25 crores to Rs 2.5 crores.

Restrictions like the minimum net worth needed for grant of licence or the rollout of network in rural areas were all removed. Voice over Internet was allowed. Cable operators were allowed to carry voice traffic. Obviously the Maran family had advance knowledge of the policy changes and formed companies in anticipation of the policy changes.

Again, Sun TV claims that it has got the letter of intent for DTH licence from I&B Ministry. But with that almost ends I&B Ministry's role. Thereafter it is Dayanidhi Maran's Ministry which has to grant the Spectrum under the wireless policy procedures.

The DTH policy says that after letter of intent is issued by the I&B ministry, the applicant will 'apply to the WPC wing of the Ministry of Telecommunications for seeking wireless operational licences' for DTH. So the one who grants the wireless licence to Sun TV whose promoter is Dayanidhi Maran is Telecom Minister Dayanidhi Maran!

Identical is the case of the 67 out of 338 FM radio licences in 91 cities of India obtained by Sun TV group. It bid for 84, got 67 and would retain under the law some 46, and sell the balance. The wireless licences for the huge FM radio business of Sun TV whose promoter is Dayanidhi Maran would also be granted only by Dayanidhi Maran, the Telecom Minister.

Obviously the Sun TV group would not be treated like Tata group. It need not have to wait for two years or apply to the court like Jaya TV. It would probably get the spectrum like Kairali TV. This is the Ministry's rule for the Maran family.

Yes, it is Maran, the Minister, who grants licenses to Marans the Promoters of Sun TV and it is he who delays and denies them to those who compete with his business and who he is not inclined to. The functions of Maran the Minister and the interests of Marans the Sun TV promoters seem harmonious. The conflict is only between his function as the Minister and the interests of the public. In short the Telecom Ministry is run by Dayanidhi Maran for Sun TV and against those who are not for Sun TV.
K.Shyam

Posted by Shyam Krishnaswamy at 1:02 PM

1 Comments

  1. Blogger Narain posted at Tuesday, May 2, 2006 at 3:53:00 PM GMT+5:30  
    Hey,

    Shyam, we met at Chennai bar camp. drop me a mail at narain at 360in dot com. i need to talk to you.

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