What will telecom minister A. Raja say in his defence this time? There is clear evidence now about his follies in allocating new telecom licences and spectrum—the finite national resource key for mobile services.
First, the Central Vigilance Commission (CVC) has questioned the department of telecom’s motives for refusing to auction 2G mobile spectrum and insisting on terms that have been described as ambiguous and political patronage driven, including on these pages. Second, the finance ministry has been reported to have estimated the economic value of spectrum at 3.5 times what is charged.
Illustration: Jayachandran/ Mint
The issue of letters of intent (LoIs) on first-come-first-served terms, coupled with ad hoc cut- off dates, for entering and/or expanding mobile services across India had raised concerns about non-transparency among the industry and independent observers last year. Despite litigation, licences were then issued to some players. Now, spectrum is being allocated selectively—at the same grossly underpriced figure of Rs1,651 crore being charged for the licence itself.
If auctions were the route, spectrum would be sold at market price and the revenues would go to the exchequer— there would be no scope for rent earning by interpreting DoT’s subjective criteria at will.
So far, Raja has managed to withstand pressure from both the finance ministry and the Prime Minister’s Office—with the perverse logic that DoT is legally bound not to go back on its existing telecom licensing terms—that the government can’t change policy and auction spectrum. But those terms actually state that the licensor (government) has the right to modify the procedure of spectrum allocation at any point in time without assigning any reason!
DoT has very conveniently cherry-picked the telecom regulator’s recommendations. First, Trai said in 2003 that fresh licences be awarded in a multi-stage bidding process for efficient use of spectrum. That was ignored, as well as the condition that licensees shouldn’t be allowed mergers and acquisitions till they roll out services for which they get the spectrum. So, non-serious awardees can easily earn the premium that the exchequer should have got—by striking deals with those who genuinely need it, but were out of or fell behind in that controversial queue. CVC has asked DoT to reply to these concerns.
We, therefore, welcome CVC’s stern stand—it has rapped Raja hard on the knuckles, saying his reasoning against auctions is “neither convincing nor acceptable”—it’s just what the doctor ordered. We hope CVC won’t let up in its efforts.
DoT’s treatment of licences and spectrum appropriate? Write to us at email@example.com