Department of telecommunications ignored set norms in 2G auction conduct

Department of Telecommunications (DoT), under A Raja as the communications minister, seemed to be in a hurry to go ahead with the first-come-first-served policy in the second generation mobile licensing, going by documentary evidence submitted to the Supreme Court in relation to the ongoing investigation into the spectrum scam.

Several established norms of policy-making and governmental ethics were ignored by the department during 2007-08, these documents reveal.

For instance, a crucial recommendation by the Telecom Regulatory Authority of India (Trai) on 2G licensing was placed before the Telecom Commission in October 2007.

But none of the four permanent members of the Telecom Commission, the highest decision making body in the DoT, was informed about the meeting.   

During this meeting, a committee of six DoT officials was constituted, which then accepted the Trai recommendations that had favoured auction in general, but cited practical problems in the case of 2G bidding.

Nripendra Misra was the Trai chairman when 2G licensing recommendations was issued in 2007. 

Raja has maintained that DoT under him had followed the Trai recommendations of 2007 on first-come-first-served 2G licensing, rather than taking the auction route.

But, he has never pointed out that the Telecom Commission meeting called to consider the Trai recommendation on 2G licensing was held without any of the four permanent members, thereby taking away transparency from the process of policymaking.

The four permanent members of the Telecom Commission, who were not informed about the critical meeting, were secretaries to the Ministry of Finance, Department of Industrial Policy and Promotion (DIPP), Department of Information Technology, and Planning Commission.

The main allegation against Raja is that by following the first-come-first-served 2G licensing policy, he had caused a loss of Rs 1.76 lakh crore to the national exchequer.

This notional figure, arrived at by the Comptroller and Auditor General of India (CAG), also includes revenue impact from allowing dual technology services. Had it been a full Telecom Commission meeting in October 2007, the decisions taken could have been different as the permanent members would have weighed the financial implications of first-come-first-served 2G mobile licensing against the process of auctioning, point out experts.

In another instance, Raja dismissed the opinion of the then law minister H R Bhardwaj that the whole issue of new 2G mobile  licences and dual technology services should be looked at by an Empowered Group of Ministers.

Although DoT’s member (technology) had sought the opinion of the law ministry and the attorney general of India on the matter, Raja wrote to Prime Minister Manmohan Singh, pointing out that Bhardwaj’s advice on EGoM was out of context. In his November 2, 2007 letter, Raja told the PM that DoT had decided to go ahead with the first-come-first-served policy for applications received till September 25, 2007 (the revised cut-off date that DoT announced allegedly to favour some companies get 2G mobile licences and spectrum).

Even as the PM wrote to Raja on the industry concerns about processing a large number of applications in the backdrop of inadequate spectrum, the controversial DMK minister replied saying “it would be unfair, discriminatory, arbitrary, and capricious to auction the spectrum to new applicants” as it would not give them level-playing field.

Following that, in November 2007, the then finance secretary D Subbarao, who’s now the Reserve Bank of India (RBI) governor, had written to DoT secretary (at that point) DS Mathur, expressing reservation on the decision of the DoT on grant of licences in 2007 at the rate determined in 2001.

Subbarao said that in view of the financial implications, the finance ministry should have been consulted before finalising the decision. Subbarao also wanted further action to implement licences stayed.

To that, the DoT secretary replied that the entry fee was finalised as per a Cabinet decision of 2003 and that dual technology licences were issued based on Trai recommendation of August 2007.

Also, a meeting of full Telecom Commission was called for January 9, 2008, to look at issues like spectrum pricing, but was deferred to January 15. However, in the meantime, in violation of all procedural norms, DoT issued a press release announcing that it had decided to issue letters of intent to those 2G licence applicants which had applied by September 25, 2007 (the arbitrary cut-off date set by the Raja regime).