Column : Trai risks contradicting itself

Written by Rishi Raj | Updated: Sep 7 2011, 08:04am hrs
Dear Mr Arnold,

Your letter dated August 20 to the CBI on the 2G spectrum scam, stating that Trai never asked for auctions in 2003 and 2007, and it did not even ask for revision of entry fee in 2007, has created a lot of confusion. It is also being perceived to have weakened the CBIs case in the matter. However, considering the importance of the issue and the differing stand of Trai on the subject, since it said something very different in its affidavit in the Supreme Court in March, certain basic questions arise, which would help in determining what its stand on crucial issues exactly is. I, therefore, have a couple of questions for you, the answers to which would help in clarifying Trais stand on the subject.

l Mr Arnold, since you have said that Trai was never in favour of auctions or a revision of entry fee, could you please take the trouble of explaining the following: The Trai recommendations were made on August 28, 2007, at which time there were approximately 49 applications pending for licences against 155 slots. By the time the DoT decided to act on your recommendations, the number of applications had jumped to 575. If supply far exceeds the demand then what is the best course to decide who gets licences and who doesnt

l I quote from the Trai affidavit filed in the Supreme Court in March this year where it said: While Trai was not in favour of holding auctions for 2G bands, it has nowhere suggested or recommended that the entry fee should be kept pegged at 2001 level. You have then gone ahead and quoted from the 2007 recommendation: 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 (2001). In todays dynamism and unprecedented growth of the telecom sector, the entry fee determined then is also not the realistic price for obtaining a licence. Perhaps, it needs to be reassessed through a market mechanism. Could you please clarify your stand on this now It is particularly important since you served at Trai exactly in the same capacity in 2007.

l In the same affidavit before the Supreme Court, you have also stated that former telecom minister A Raja never followed the proper procedure while granting the licences and there was never a specific reference to Trai for the purpose of issuing new licences and at what prices. This is what you said: In fact, based on Trais recommendation of 2007, the first step should have been to assess the availability of spectrum, to lay down spectrum allocation criteria and pricing methodology as a matter of policy and to place the same in public domain. Thereafter, the central government should have sought a specific recommendation from Trai for issuing new licence to a service provider as envisaged by the second and fourth proviso of section 11 (1) of the Trai Act. However, this was not done. What is your position on this now

l Your former chairman Nripendra Misra had written several letters to the DoT against the selective implementation of the 2007 recommendations and urged it to refer the matter back to it in case the government wanted to issue new licences or differed on specific recommendations. These were ignored. Since you were secretary of Trai then also, surely you would have known all this. These letters are also part of the annexures of the Trai affidavit. Do you see Trai as a continuous body irrespective of who the chairman is or do you think that with every new chairman the stand of the regulator should change on major issues I dont mean change is not for the good but dont you think that any such change should be accompanied by valid reasons and proper public debate

l Post your 2007 recommendations and the DoTs decision to implement it, the Prime Minister also strongly advocated the case of auctions or price indexation in his letter of November 2, 2007, to Raja. The Prime Minister even explained that this was required for better spectral efficiency and optimal usage of spectrum. If the Prime Minister feels the need for indexation of price and transparency, why is Trai not coming forth on the issue

l You have now said in your letter that the new telecom policy (NTP) 1999 did not recommend auctions. It was an executive decision that led to auctions in 2001 to grant licences. Since the first ever allocation of licences after the NTP 99 was made in 2001 through auctions, why could not the same be done in 2008

l You have also said in your letter that Trai repeatedly held the view that telecom services and spectrum should not be treated as a source of revenue for the government. Against this backdrop, could you please explain, why did the same body recommend auctions in the case of 3G and broadband wireless spectrum, which were held in 2010

You would appreciate that a comprehensive stand of the regulatory body on this important subject needs to be unambiguously cleared for once and all.

PS: I am aware that I should have addressed this letter to the Trai chairman since your letter to the CBI is with the approval of the Authority. However, since you are the signatory, I chose to address it to you.

Sincerely,

rishi.raj@expressindia.com