Business

Industry Surprised by Abrupt Transfer and Removal of Telecom Secretary

J.S. Deepak’s transfer reflects poorly on an already controversial, crony capitalism-prone sector.

Jio aur jeene do? Telecom secretary J.S. Deepak (L). Credit: PTI (L), Reuters

Jio aur jeene do? Telecom secretary J.S. Deepak (L). Credit: PTI (L), Reuters

New Delhi: The hasty removal and transfer of Department of Telecommunications (DoT) secretary J.S. Deepak – a government official who has been closely associated with the telecom department for seven years now – unnecessarily muddies the waters for an industry wracked by recent allegations of crony capitalism and favouritism.

According to government officials and industry executives, while Deepak’s transfer may have been in the works for sometime, the actual announcement was a slightly surprising and hasty affair.

“Over the last two years, rules for foreign travel have tightened. Before officials go on foreign trips, they need approval from either the screening committee and in some cases the PMO. Deepak left on Tuesday for Barcelona. His transfer order with immediate effect was issued on Wednesday midnight. Does this look carefully planned?” a senior government official, who declined to be identified, told The Wire.

What makes matters worse, sources say, is that Deepak, who has been shifted to the commerce ministry and been named India’s permanent representative to the World Trade Organisation with effect from June 1, 2017, has essentially been given a three-month holiday.

“It’s true that he obviously has had past experience with the commerce ministry and serving as a country negotiator in trade agreements. So this transfer makes sense.  But this post in the commerce ministry [as officer special duty] has been specifically created for him. Anjali Prasad [India’s current representative to the WTO] is only stepping down by May-end so Deepak has to wait till June to assume his duties,” the official said.

Not a stranger to Jio

Deepak is a 1982 IAS batch officer from Uttar Pradesh, whose reputation is all by all accounts extremely spotless.

His first stint at the DoT was as joint secretary from April 2008 to July 2010. During this time, he is most popularly known for helping administer and popularise the e-auction method during the 3G spectrum auctions.

Lesser known, and even lesser mentioned, is Deepak’s role in the controversial 4G spectrum auctions that took place between May-June, 2010. These auctions, as The Wire has reported on and analysed, covertly birthed the telecom juggernaut now known as Reliance Jio. The auctions saw incumbents Airtel, Vodafone and Idea outbid by Reliance Jio Infocomm, which then went by the name ‘Infotel Broadband Services Private Limited’. The end result was that Reliance Jio was allowed to use 2.3 Ghz spectrum for mobile telecom services. This BWA (broadband wireless access) spectrum was initially allocated for broadband, but the DoT later allowed it for mobile telecom services as well.

Deepak was also later brought in by the previous central government in 2012 for the 2G auctions, in an attempt to clean up former telecom minister A Raja’s mess. His formal return to DoT was in January, 2016, when he replaced Rakesh Garg as secretary.

Jio pressure?

So why has he now been moved out? One assumption is that it it’s to simply strengthen India’s position vis-a-via the WTO. Others are slightly more pessimistic.”When a bureaucrat is shuffled quickly,” an industry executive told The Wire, “I look to the newspapers to see what he or his department has been recently saying.”

Sources point out the most recent contentious issue that Deepak and the Telecom Commission – a high-ranking, decision-making body within the DoT– went public with over the past few days has been whether Reliance Jio’s promotional data and voice offers have resulted in a loss of revenue to the government.

Reliance Jio’s free data and voice offers, which essentially have been ongoing since last September, have sparked controversy within the telecom industry. Incumbent operators such as Airtel and Vodafone have alleged that Jio’s offers amount to predatory pricing. After much back-and-forth between the DoT, the industry and TRAI, the regulator ruled that Jio’s free data offers violated no rules.

Deepak and the Telecom Commission have been upset, sources say, with TRAI’s decision. The DoT wrote a sharp letter to TRAI last week, saying that the Reliance Jio zero-revenue policy could defer or delay spectrum payments to the government and ultimately further distress India’s banking system – heavily indebted as it is to the telecom sector.

While the DoT and Deepak’s logic has itself been challenged, it has understandably sparked a certain amount of controversy within government circles.

“Crying out ‘loss of revenue to government’ has now become something quite dangerous within bureaucratic circles. The moment you say that, it comes with a host of other things. Should the CAG be involved? Should other parties or regulatory organisations look at how things have been playing out between incumbents and Reliance Jio over the last year?” a former senior telecom official told The Wire.

“Was Deepak’s transfer due to this? Difficult to say. But nevertheless, it just doesn’t look good, for a high-ranking, respected official to be moved out at a time like this,” the official added.

Telecom Commission butting heads

The most recent issue of whether Reliance Jio has caused a loss of revenue to the government hasn’t been the only time that the DoT and the Telecom Commission (TC) have butted heads with Reliance Jio and TRAI over the last year.

As The Wire has reported, there are at least two major issues which the TC (headed by Deepak) has brought out over the last year. Both issues have some element of alleged favouritism to them.

Firstly, the TC took a strong position on the question of whether a uniform spectrum charge should have been levied. Owners of broadband spectrum (such as Reliance Jio), specifically those who won spectrum in the 2010 auctions, had to pay a spectrum usage charge of only 1%. After the DoT decided that the same spectrum could be used for mobile telecom services, it became apparent that certain companies were handed a policy abritrage by exploiting the difference in SUC levied on different bands.  The DoT had decided that a uniform SUC should come into place, perhaps ranging somewhere between 3% and 4.5%. This would have been a huge blow to Reliance Jio. However, the decision to keep a simple formula was scuttled by the Attorney General and a compromised formula was finally settled upon.

The second issue on which the DoT and Deepak have taken a strong position against TRAI (and implicitly Reliance Jio) is the manner in which telecom regulators recommended penalties against Airtel, Vodafone and Idea for not properly providing ‘points of interconnection (PoI)’. The telecom regulator accused incumbent operators of providing insufficient PoI to Reliance Jio, and recommended massive penalties against them.

The TC had strongly pushed back on this, questioning TRAI’s methodology and even asking whether the regulator had the authority to recommend such penalties.