Bleeding us dry.

Taking advantage of the cancellation of 2G licenses by the Supreme Court the government thought that it would extort billions out of telecom firms by auctioning the licenses again. They set the base price at Rs 140 billion and were going to auction CDMA and GSM licenses separately to maximize profits. Too much greed leads to failure. There are no bidders for CDMA licenses after Tata Teleservices pulled out of the auction. Earlier Videocon had also pulled out leaving only Tata in the field. " Now there is no bidder left for CDMA. We have to take a call on what to do," said a senior official who naturally did not want to be named. Only 6 companies, Airtel, Vodafone, Videocon, Telenor, Tata Teleservices and Idea have applied for GSM licenses but not one company has applied for a pan India license. Reliance Industries and Russia's Sistema have not applied at all. Airtel and Videocon are bidding for additional spectrum in select circles and Videocon, Idea and Telenor are bidding for new circles and additional spectrum. Not only that, the government is going to levy a one time charge of Rs 309 billion for spectrum on all telecom companies. MTNL and BSNL being government companies their contribution will not add to the loot but private companies will have to shell out Rs 191 billion. The government's argument is that spectrum belongs to the people and private companies should pay to profit from national assets. The trouble is that telecom companies will pass on the extra cost to consumers in the form of higher charges. Just 20 years back there was only landline and there were only 2 phone companies in India, MTNL and BSNL. These being government companies the service was absolutely lousy, the employees were incredibly rude, you had to wait 4 years to get a connection and the cost of a call from Delhi to Mumbai was Rs 100/minute. Today anyone can buy a handset and get a SIM card from anyone of a million shops for as little as Rs 2000. The line will be activated within a couple of hours and the same call between Delhi and Mumbai costs as little as Rs 1.50/minute. This has meant that the poorest person is now able to afford a cell phone and, according to activists, this increased connectivity has resulted in increased earnings and well being of the poor. Just as the poor are unable to fly or afford cars because of huge taxes so increased charges will mean that the poor will have to give up their prized cell phones. Yet there is a way to earn from natural assets. Instead of auctioning spectrum or mines you auction profit sharing. The company which offers the maximum share of profits will be awarded the contract. That way companies do not incur huge costs up front and competition ensures low prices. However, with this system the payment gets staggered over many years and the Congress cannot wait. They need money now to bribe the electorate for the election in 2014. They will bleed us till not a drop is left.