Mr. Vaghul, our first Chairperson, passed away on Saturday. I write this note to express my deep gratitude to him, and to celebrate his life. And what a life he lived!
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Mr. Vaghul and I at his residence |
Our past and present Chairpersons, |
Industry stalwarts have spoken about his contributions to the financial sector, his mentorship of people and institutions across finance, industry and non-profits. I don’t want to repeat that (though I was a beneficiary as a young professional starting my career at ICICI Securities). I want to note here some of the ways he helped shape PRS.
Mr Vaghul was our first chairman, from 2012 to 2018. When he joined the board, we were in deep financial crisis. Our FCRA application had been turned down (I still don’t know the reason), and we were trying to survive on monthly fund raise. Mr Vaghul advised us to raise funds from domestic philanthropists. “PRS works to make Indian democracy more effective. We should not rely on foreigners to do this.”. He was sure that Indian philanthropists would fund us. “We’ll try our best. But if it doesn’t work, we may shut down. Are you okay with that?” Of course, with him calling up people, we survived the crisis.
He also suggested that we should have an independent board without any representation from funders. The output should be completely independent of funders’ interest given that we were working in the policy space. We have stuck to this advice.
Even when he was 80, he could read faster than anyone and remember everything. I once said something in a board meeting which had been written in the note sent earlier. “We have all read the note. Let us discuss the implications.” And he could think three steps ahead of everyone else.
He had a light touch as a chairman. When I asked for management advice, he would ask me to solve the problem on my own. He saw his role as guiding the larger strategy, help raise funds and ensure that the organisation had a strong value system. Indeed, he was the original Karmayogi – I have an email from him which says, “Continue with the good work. We should neither be euphoric with appreciation or distracted by criticism.” And another, "Those who adhere to the truth need not be afraid of the consequences".
The best part about board meetings was the chat afterwards. He would have us in splits with stories from his experience. Some of these are in his memoirs, but we heard a few juicier ones too!
Even after he retired from our Board, he was always available to meet. I just needed to message him whenever I was in Madras, and he would ask me to come home. And Mrs. Vaghul was a welcoming host. Filter coffee, great advice, juicy stories, what more could one ask for?
Goodbye Mr. Vaghul. Your life lives on through the institutions you nurtured. And hope that we live up to your standards.
Madhavan
TRAI released its recommendations on auction of spectrum on April 23, 2012. The recommendations are in pursuance of the Supreme Court order cancelling 122 telecom licences. The cancellation was ordered on grounds of procedural irregularities and arbitrariness in the first-cum-first-serve policy for allocation of spectrum. The recommendations, if adopted by the Department of Telecommunications, would change various aspects of the present telecom policy, including (a) relationship between a telecom licence and spectrum; (b) procedure for allocation of spectrum; (c) pricing of spectrum; (d) limits on spectrum allocation; and (e) use of spectrum. Relationship between telecom licences and spectrum Previously, under the Telecom Policy 1994 (updated in 1999), spectrum was tied in with telecom licences. Since 2003, licence conditions provided for award of two blocks of 6.2 MHz of spectrum for GSM technology and two blocks of 5 MHz for CDMA technology. As per the government’s decision of January 17, 2008 (as explained in TRAI's consultation paper, see page 3 paragraph 7) additional spectrum would be awarded on the basis of increment in the number of subscribers. Service providers had to pay a licence fee (on obtaining the licence), an annual licence fee and a spectrum usage charge determined on the basis of their adjusted gross revenue. TRAI has recommended that telecom licences and spectrum should be de-linked. The service provider would thus pay separately for the value of the licence and the spectrum. With this formulation an entity that does not hold a licence, but is eligible to secure one, may also procure spectrum. This would help in avoiding situations where licence holders have to wait to secure spectrum or offer wire line services in the absence of spectrum. Procedure for allocation of spectrum TRAI has recommended that spectrum be auctioned by means of a simultaneous multiple round ascending auction (SMRA). This means that the service providers would bid for spectrum in different blocks simultaneously. In the first round of auction a reserve price (base price) set by the government is used. Reserve price for auction and payment mechanism A reserve price indicates the minimum amount the bidder must pay to win the object. In case it is too low, it may reduce the gains made by the seller and lead to a sub-optimal sale. If it is too high, it may reduce the number of bidders and the probability of the good not being sold. Various countries have adopted a reserve price of 0.5 times the final price. TRAI has recommended that the reserve price should be 0.8 times the expected winning bid. It has also recommended that telecom companies pay 67% to 75% of the final price in installments over 10 years, depending on the spectrum band. TRAI has reasoned that a higher price would reduce the possibility of further sales upon bidders securing spectrum. However, this may lead to fewer bidders and ultimately fewer service providers. It is argued in news reports that this may increase investments to be made by the service providers and eventually an increase in tariffs. Spectrum blocks and caps TRAI has recommended that the spectrum cap should be determined on the basis of market share. A service provider can now secure a maximum of 50% of spectrum assigned in each band in each service area. However, a service provider cannot hold more than 25% of the total spectrum assigned in all the bands across the country. As per the January 2008 decision, additional spectrum could be awarded to telecom companies when they reached incremental slabs of subscribers. This could extend to two blocks of 1 MHz for GSM technology, and two blocks of 1.25 MHz for CDMA, for each slab of subscribers. TRAI has recommended that spectrum should be auctioned in blocks of 1.25 MHz. Each auction would at least offer 5 MHz of spectrum at a time. Smaller blocks would ensure that service providers who are nearing the spectrum cap may secure spectrum without exceeding the cap. However, experts have argued that 1.25 MHz block may be too limited for launching services. Also, TRAI in the recommendation has noted that a minimum of 5 MHz of contiguous spectrum is required to launch efficient services with new technologies. Use of spectrum TRAI has recommended that the use of spectrum should be liberalised. This implies that spectrum should be technology neutral. Telecom companies would now be free to launch services with any technology of their choice.
