Column : Dialling confusion in the Raja scam

Written by Rishi Raj | Updated: Aug 5 2011, 06:51am hrs
Since the beginning of last week, the accused in the 2G spectrum case have been presenting their defence in the CBI special court. The common thread among the accused who have presented their line of defence is: each has tried to drag in the names of other people who are not on the chargesheet, citing that if there was a crime committed the other person was as guilty as the accused. The second common point is to point out that everything was done as per government policy, that the policy never supported auction of either spectrum or licence since the aim was to improve teledensity. True, such myths have got perpetuated by the accused time and again because of some factually incorrect statements or a case of selective quoting from the documents by telecom minister Kapil Sibal and deputy chairman of the planning commission Montek Singh Ahluwalia.

With each passing day, the accused are parroting myths, which certainly is the CBIs task to refute in the court. However, lay readers following the 2G scam may get confused. The purpose of this column is to explode such circulating myths by putting things in perspective and context so that any confusion in the minds of readers gets cleared.

Myth 1: That the government policy was never to auction spectrum. This is the biggest myth that has been created by people like Sibal and Ahluwalia, and is now being parroted by the accused and their lawyers with aplomb. What is quoted is the 10th plan document to support their case. A selective quoting of the 10th plan document is done to show that revenue considerations were never an objective: Governments broad policy of taxes and regulation for telecom sector has to be a promotional one. Mopping up of resources or revenue generation by government should not be determinant of the policy governing the sector, is the selective quote used by Sibal. Now lets see what the full quote actually says in the 10th plan document in Section 8.5.38, to understand it in proper context. It adds to the above quotation, The incidence of licence fees in the form of revenue share and spectrum charges has to be guided by this principle. Keeping in line with the policy adopted by most of the progressive administrations in the world, the licence fee needs to be aligned to the cost of regulation and administration of universal service obligations. Its clear, the plan document does not talk of entry fee and does not comment on auction. It is merely talking about a revenue share licence fee, which is quite different from an entry fee.

Myth 2: Trai never recommended auctions in 2003 and 2007. This is another big myth going around. The fact is that in Section 7.39 of its recommendation dated October 27, 2003, Trai said: The induction of additional mobile service providers in various service areas can be considered if there is adequate availability of spectrum. As the existing players have to improve the efficiency of utilisation of spectrum and if government ensures availability of additional spectrum then in the existing licensing regime, they may introduce additional players through a multi-stage bidding process as was followed for fourth cellular operator (in 2001). The only exception to this were the basic operators who migrated to UASL in 2003 like Reliance Infocomm and Tata Teleservices. Now lets come to the August 2007 recommendations, by which former telecom minister A Raja swears. True, it did not specifically ask for auction in the 2G band, but this is what it said with regard to the entry fee in Section 2.73: The entry fee as it exists today is, in fact, a result of the price discovered through a market based mechanism applicable for the grant of licence to the fourth cellular operator. In todays dynamism and unprecedented growth of telecom sector, the entry fee determined then is also not realistic for obtaining a licence, perhaps it needs to be reassessed through a market mechanism. If Raja or Sibal quote Section 2.78 and 2.79 stating no auction, surely the right way was to seek clarity from Trai. In fact, Trai later wrote three letters asking to be consulted if new licences were to be granted but they were ignored.

Myth 3: Trai had asked for the lowering of entry fee in 2005. The recommendations are on the Trai Website ( Read it carefully. The recommendations of January and May 2005 nowhere talk about lowering entry fees. It only deals with the revenue-share licence fee and spectrum usage charges. This also in the context of a universal licensing regime, which has not been implemented till date. Most interestingly, as highlighted by the Justice Patil report, even these recommendations of Trai were rejected by Raja on June 10, 2007!

Myth 4: That Raja only followed the policy of his predecessors Arun Shourie and Dayanidhi Maran who gave licences at 2001 rates. True, licences were given by the two without auctions26 by Shourie and 27 by Maranand its not my case to defend them. But then the context needs to be understood. The number of applications at Shourie and Marans time were around 10-12 at a time. At Rajas time, it was 575. During Shourie and Marans time there was spectrum to accommodate the newer players while in the case of Raja, spectrum was much less than the applicantsin 2004-06, there was one application for four licences the government had spectrum for; in 2008, there were 4.5 applicants for each licence. Thats the reason the first cut-off date of October 1, 2007, and then its advancement to September 25, 2007, and the tweaking of the first-come first-served policy.