2G - from scam to flop-show - confusing !!

The common man [aam admi] continues to live in a confused state – it is tough understanding the happenings in India.

It shook the Nation and had some heads rolling – it is stated to be much deeper than it has been portrayed – ‘2G spectrum scam’ involved politicians and government officials in India illegally undercharging mobile telephony companies for frequency allocation licenses, which they would then use to create 2G subscriptions for cell phones. The shortfall between the money collected and the money which the law mandated to be collected was reported to be  176,645 crore  as valued by the Comptroller and Auditor General of India based on 3G and BWA spectrum auction prices in 2010. The exactitude is never known –  the Minister for Communciations & IT claimed in 2011 that it was ‘zero loss’.  The methodology in allotment was more flawed.

All the speculations of profit, loss and no-loss were put to rest on 2 February 2012 when the Supreme Court of India delivered judgement on a public interest litigation (PIL) which was directly related to the 2G spectrum scam. The Supreme Court declared allotment of spectrum as "unconstitutional and arbitrary," and quashed all the 122 licenses issued in 2008 during tenure of A. Raja (then minister for communications & IT) the main official accused in the 2G scam case. 

When aam admi who is an illiterate sells something, he would sell it to the highest bid; but the Govt run by scholars decided to award the licenses on ‘first come first served basis’ – later amended to those who complied with the conditions; in Jan 2008, select Companies were given few hours to provide Letter of Intent and provided allotment – which subsequently landed officials and the Minister himself in the jail.  All that is ‘thing of the past’ as the Minister is out now and alongside more tainted people – all form part of various committees of the Parliament. 

Now the Govt. announced 2G spectrum auction – once bitten, the formalities, modalities would be fitter, aam-admi thought.; only to get fooled again.  The Code Division Multiple Access (CDMA) spectrum auction has flopped before it has begun, with both the interested parties pulling out of the race.   Once the announcement was made there were two bidders for CDMA and five bidders for GSM – the Companies were required  to pay a one-time fee for spectrum more than a certain limit.

There is news that Tata Teleservices Ltd (TTSL) has decided to pull out of the upcoming 2G auction leaving no takers for the spectrum in the CDMA 800 Mhz band.   This will also make the Government poorer by around Rs 13,000 crore which is the value based on the base price for 95 MHz of spectrum on offer in this band. The base price of 800 Mhz was fixed at 1.3 times that of 1800 Mhz-which is at Rs 14,000 crore for 5MHz pan India spectrum.   

However the five operators  Bharti Airtel , Vodafone, Idea Cellular, Telewings, the new company floated by Telenor and Videocon decided to stay put and finally take part in the auctioning of the 1800 Mhz band which is used currently for 2G  services. However based on the earnest money deposits (EMD) made by the telcos, most experts admit that except for only two to three circles, the auction will be over in only a few rounds if not the first round itself.   With such a muted response the Government’s target to get Rs 40,000 crore from the upcoming 2G auction and the one-time payment of spectrum is expected to fall off the mark.

In the 2G race, earlier  Videocon withdrew its application for 10 CDMA circles and by the 3 pm deadline today Tata Teleservices had also thumbed its nose at the government’s attempt to bridge its fiscal deficit by auctioning airwaves (spectrum) at sky high prices.  Sistema Shyam, the third potential applicant, had clarified earlier that it awaits a decision on its curative petition filed in the Supreme Court for restoration of cancelled licences and is not interested in participating in the upcoming auctions. Reliance Communications also decided to abstain.

The telecom ministry is scheduled to start auctions for airwaves from 12 November for GSM-based mobile services, which was to be followed by the CDMA airwaves auction.  With the total failure of CDMA auctions and the less-than-enthusiatic applications for GSM airwaves, telecom industry analysts have pointed out that based on earnest money deposits made by hopeful bidders till today, the government will generate less than half of the Rs 45,000 crore target from the entire auction process.

So from a scam to a flap-show, is what common man understands about 2G

With regards – S. Sampathkumar.

6^th Nov. 2012