In response to a question, Sibal asked Thapar how hed deal with the situation (like the one facing Raja) where:
l Rajas predecessors had given out 51 licences without auctioning in 2004-06, so why was he wrong in doing the same
l How do you resolve a newcomer having to pay an auction price when the incumbents didnt have to do this
Wow! And Sibal still told Thapar he wasnt defending Raja! Sibal said he was raising these questions because he was hoping a debate in Parliament would help clear the air a bit. Sibal is clearly trying to put the BJP on the defensive since Arun Shourie gave out several of these licences, but it does appear hes being briefed all wrongany lawyer as smart as Sibal knows that if a briefing isnt good, whats a poor lawyer to do
51 free licences versus poor Raja: There is little doubt all 51 licences should have been auctioned instead of being given at the 2001 auction prices. The question, however, is whether the auction price would be much higher than the one got. Its not possible to make the past happen again, but we can make some educated guesses. We know 51 licences were issued in 2004-06, and we know Raja gave 163 (including the 41 dual-technology ones) licences, so the government had enough licenses/spectrum for 214 areas. So, in 2004-06, there was one application for every four licences the government had spectrum for. In 2008, by contrast, there were 575 applications on October 1, 2007, and the government gave out 122 licences, which means there were 4.5 applications for each licence. The exact opposite of 2004-06! Which auction would fetch a higher price, Mr Sibal
Also keep in mind that, of the 51 licences issued, 21 were in C circles like Bihar, Himachal, Orissa and J&K, where, in 2001, there were no bidders. Indeed, in even the 3G auctions, these circles fetched just a fourth of the bids for B circles, a twentieth of the bid for A circles. So its not obvious there was a huge revenue loss for the government in 2004-06 on this account. Another 9 licences, of Tata Teleservices, were part of the full-mobility policy of 2003. As for those given in 2006, well, that was a UPA government, wasnt it
Its interesting to keep in mind that none of these arguments are new, and PM Manmohan Singh was as much aware of them when he wrote to Raja, on November 2, 2007, asking him to auction. The PM knew that the government had enough spectrum to give out 200-odd licences, and he knew there were 51 licences issued in 2004-06; the PM knew the government had 575 applications and could give out only 122 licences. Yet, he was in favour of auctions. Perhaps the PM thought he had a better handle on economics than a lawyerlike Sibal, Raja is also a lawyer.
As a leading lawyer, Sibal knows it is okay to stretch the truth, but he knows it is a crime to tell the Court lies, and to do this on affidavit is tantamount to murder. Yet thats what the telecom ministry did under Raja (see Innocent of the law, FE, November 20, www.financialexpress.com/news/column- innocent-of-the-law/ 713547), and that is what the ministry under Sibal continues to tell the court. The ministrys affidavit, for instance, says it is implementing the Trai advice of not putting a cap on the number of telecom service providers. But given that it had 575 applications, giving licences to 122 was a cap, wasnt it By the way, this tells you just how brazen the government isthe government made this exact were-implementing-the-no-cap-recommendation argument while defending Raja in the STel case, this is the argument the Delhi high court turned down, this is the argument the division bench and the Supreme Court also turned down, and yet Sibals ministry goes and makes it all over again before the Court.
Unitech vs Bharti Airtel: Why should Unitech, by way of example, be asked to pay an auction price for its spectrum if incumbents like Bharti and Vodafone got their licences free This is the crux of the question Sibal and other Congress defenders are asking aggressively. Companies like Bharti and Vodafone will give you details to show this isnt quite truearound 15 of Bhartis licences, for instance, were got in auctions and/or bought in the market from existing players (and keep in mind the point made about the C circles), but lets ignore this for a while, lets assume Sibal is right. The question, however, is: Should a person whos buying land in Gurgaon today pay the same price as someone who got land in Gurgaon at a time when there were few takers several decades ago That doesnt need answering, does it, Mr Sibal
Also, lets understand what determines prices. Demand and supply, right Weve discussed the 1:4 versus 4:1 demand-supply equation, but whats even more interesting is to see the subscriber numbers. In 2001, when the first auction took place, India had 4 million subscribers; in 2006 when Dayanidhi Maran gave out licences there were around 110 million; in 2010 when the 3G auctions took place, there were 620 millionin other words, with the subscriber base rising, and Raja giving out 163 licences in 2008, firms were desperately starving for spectrum in 2010 and were ready to pay anything for it.
To get back to Sibals demand for a debate in Parliament, given whats just been said, Sibal would be better served by avoiding a debate since much of this will be pointed out. Imagine a situation where, to counter Sibal, the BJP calls upon the Prime Minister to defend the pro-auction policy! If that sounds absurd, keep in mind that all BJP leaders need to do is to read out the PMs letter to Raja, again and again. And again.