2G probe widening may bring more skeletons out of closet

More heads could roll with the Supreme Court (SC) asking investigative agencies to widen the scope of the 2G spectrum licensing probe to cover a period from 2001 to 2009. Even as former telecom minister A Raja was forced to quit over the alleged 2G allocation scam of 2007-08, several policies and regulatory recommendations during the NDA regime are likely to come under the scanner now.

In 2001, when Ram Vilas Paswan was telecom minister, the NDA government had sought to allow fixed wireless application of CDMA (code division multiple access) players for limited mobility operations. Tata group chairman Ratan Tata had said in an open letter recently that the “first attempted deviation of stated policy” had occurred in 2001 under Paswan.

Later in 2001, during Pramod Mahajan’s tenure, a controversial decision was taken to allow fixed phone operators to offer limited mobility through WLL (wireless in local loop). Reliance Infocomm from the Ambani stable (when the brothers were together) benefited from this policy.

When Arun Shourie was appointed telecom and IT minister in 2003, the NDA government formulated a first-come-first-served and technology neutral policy for issuing 2G licences with startup spectrum. The cost of pan-India 2G licences then was set at Rs1,651 crore.

Raja followed the same policy while issuing a series of 2G licences (120 of them) during 2007-08 at the same price.  The allegation against Raja is that he chose to follow an archaic policy rather than opting for an auction, thereby causing a huge loss to the exchequer.

A recent CAG report put the  loss at Rs1.76 lakh crore.
Shourie, who was telecom minister till May 2004, told the media on Thursday the SC order would establish how “honest decisions were taken by honest persons”.

Before Raja took over in 2007, Dayanidhi Maran was telecom minister in UPA-I from 2004. Both Shourie and Maran issued 2G licences (52 of them, according to Raja) under the first-come-first-served policy.

The 2G licences granted by Maran and Shourie may not have attracted attention because the telecom space was  not so competitive then, an expert pointed out.

To keep telecom tariffs affordable and increase teledensity, first-come-first-served was seen as a logical option. Also, when 2G licences were issued by Shourie and Maran, Telecom Regulatory Authority of India (Trai) was yet to recommend auction of spectrum as a way forward.

While Raja cherry-picked from Trai recommendations of 2007 on 2G licensing, he also tinkered with the deadline and the cut-off date for submitting applications, thereby favouring some operators. As the CAG report pointed out, “issuance of 120 licences in just one day and at a price discovered in 2001 [under Raja] has drawn the attention of the media, parliament and informed members of the civil society. Questions have been raised regarding transparency in the allocation process and the failure in maximization of revenue generation from the allocation of spectrum, which is a national asset”.

During Raja’s rule, the dual technology norm was also notified, thereby allowing CDMA operators to offer GSM (global systems for mobile communications) services. The SC order of Thursday states that three of the four companies providing CDMA services had applied for permission in 2006 to use GSM. In October 2007, in-principle approval was given to three operators for using GSM.
Just a few days ago, Tata group chairman Ratan Tata, replying to

an open letter by Rajya Sabha MP and former telecom entrepreneur Rajeev Chandrasekhar, argued that “many of the flip-flops in the telecom policy occurred during the BJP regime”. He also sought the period of probe to be extended to 2001.

Tata’s letter stressed that Tata Teleservices got no advantage from any minister, but Raja alleged in an affidavit to SC last week that former Trai chairman Pradip Baijal helped Tata Teleservices get nine additional licences in 2004. That was when Shourie was in the hot seat.

A year after he retired as Trai chief, Baijal joined Noesis, an associate firm of Niira Radia, the corporate lobbyist whose phone conversations with industrialists, ministers, bureaucrats and mediapersons were tapped recently.

Noesis handles accounts of all Tata group companies.