| Manmohan Singh in 'Bullring on 2G' Let Down by Bogus Experts It will Horrify the World and shame Indians all over to discover Empowered Group of Ministers (EGoM) in September2006 recommended reserve price of Rs.1060 crore for Pan India 2X5MHz 3G spectrum and soon thereafter 2007 Minister Raja released new 2G Spectrum Licenses to existing and new entrants at Rs 1,651 crores for 2G that is outdated technology first introduced in 1991. Manmohan Singh has virtually jumped in to bullring misguided by his Bogus Experts like Pitroda and others – just one paragraph would unmask gross incompetence of his ministers and government before the Supreme Court. Ø It is utter nonsense to suggest firstly 2G licensees were currently operating 2.75G makes little difference to existing and 95% of future 2G subscribers who use Voice Calls and SMSes, secondly in case of 3G too latest versions are already operation like 3.75G hence it was scandalous to 'Equate 2G and 3G' technologies. Ø It was horrendous to equate 2G and 3G – 3G application services include wide-area wireless voice telephone, mobile Internet access, video calls and mobile TV, all in a mobile environment. Ø It is more Horrendous to charge 2G license in 1800MHz band at 1.5 times of lower bands or 1.5 times more than 3G license in 2010. Ø It is most scandalous for CAG to compute losses in 2007 at 2010 rates. Ø Regarding qualifications – even over 10 year old Bharti, Tata or Vodafone Do Not Technically Qualify – they all outsource Telecom Services like installation and operation of exchanges to foreign consultants. http://cag.gov.in/html/reports/civil/2010-11_19PA/chap5.pdf 5.3. Value based on prices discovered for 3G spectrum Auction of 3G spectrum was recommended by TRAI in its Report submitted to Government in September 2006 in which they had recommended a Reserve Price for one block of 2x5 MHz 3G spectrum pan India at Rs.1010 crore which was subsequently enhanced to Rs. 3500 crore by the EGoM constituted to consider the issues relating to auction of 3G spectrum. TRAI in its report of 2010 has observed that 2G services today are actually offering 2.75G services. Therefore 'While comparing spectral efficiency and other factors, it is fair to compare existing 2.75G systems with 3G systems'. The Authority recommended 3G prices to be adopted as the current price of spectrum in the 1800 Mhz band and intends to separately study the subject for apprising the Government of its findings. They have recommended even higher pricing at 1.5 times of 1800 MhZ band for the 2G spectrum in 800 and 900 Mhz band. http://cag.gov.in/html/reports/civil/2010-11_19PA/chap1.pdf 253% Subscriber Growth 1650.90M 3/2007 to 5843.20M 3/2010 There was unprecedented growth of Mobile Subscribers but there was only smaller increase in revenue of all licenses therefore Subscribers Gained the most in terms of better service at fraction of cost. CAG didn't cover this. Ø If at all there was corruption it was 'Minute Compared to CAG nonsense'. Ø Had I advised RAJA I would have recommended Promotion of Optical Fiber Systems for fast internet, IPTV, WiFi etc that are mostly indigenously developed than Phone Based services. Ravinder Singh November17, 2010 CAG calls Raja's bluff on 2G licence allocation Ex-minister's largesse benefited shady cos Our Bureau NEW DELHI November17, 2010
ARAJA flouted almost every rule in the book, ignored advice from the prime minister down, and indulged in blatant favouritism while awarding mobile licences to mostly undeserving companies, the country's chief auditor has said, in a stinging indictment of the former telecom minister who is accused of causing a loss of nearly 177,000 crore to the government.
Using language rarely ever used against a minister, the Comptroller and Auditor General (CAG) accused Raja of granting "undue benefits" to Reliance Communications (RCOM) and giving "undue advantage" to the erstwhile Swan Telecom (now Etisalat DB), singling out these two companies for special mention in sub-headings of its report submitted to Parliament on Tuesday. The report mentioned Swan as a "front" for Anil Ambani-controlled Reliance.
CAG also slammed Mr Raja for mishandling the 2G spectrum allocation in 2008, noting that the telecom ministry under him awarded 122 mobile permits to nine companies at prices fixed in 2001, disregarding the prime minister's plea for a 'fair and transparent allocation policy'. It also accused him of ignoring the advice of the law and finance ministries, and the counsel of the telecom ministry's senior bureaucrats.
The auditor said 70% of the licences issued by Mr Raja were "illegal", and companies granted these permits, notably Unitech, S Tel, Loop Mobile, Datacom (Videocon) and Etisalat, had disclosed "incomplete information and submitted fictitious documents and used fraudulent means" for obtaining them. Many companies were allowed to change 'doctored and fictitious documents' later, in some cases even as late as 12 months after they had submitted applications. It said most licensees had prior information and even pre-dated demand drafts, allowing them to jump the queue.
"The entire process of allocation of licences lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner," the CAG said.
WEB OF ALLEGATIONS
From ignoring PM's advice to favouring some corporates,Raja flouted all norms
CAG says telecom ministry had 'flouted every canon of financial propriety, rules and procedures'
Raja disregarded advice of PM, who had stressed need for 'fair and transparent allocation policy'
He did not follow Trai recommendations, ignored law ministry's advice & turned down finmin's demand that EGoM decide spectrum price. He did not take the approval of Telecom Commission
Pan-Indian licences were awarded at Rs 1,651 crore each, a price fixed in 2001, causing a loss of 1.40 lakh crore to exchequer
Raja issued licences to ineligible applicants: 85 of 122 licences issued in 2008 were illegal as these cos had disclosed incomplete information, submitted fictitious documents and used fraudulent means to get permits
Datacom (Videocon), Unitech (Telenor), S Tel, Loop Mobile, Allianz Infratech and Etisalat were not eligible for mobile permits
Swan Telecom appeared to act as a 'front company' on behalf of Anil Ambani-led Reliance Telecom
Raja's ministry doled out additional airwaves to existing telcos such as Bharti Airtel, Vodafone Essar, BSNL, among others, beyond what they were entitled to, causing an additional loss of nearly Rs 37,000 crore to the exchequer
Telecom ministry gave undue benefits to RCOM & Swan
RCOM, Shyam and HFCL were given in-principle approval for dual tech a day before the policy was announced
RCOM given GSM spectrum ahead of others who got dual-tech permit
Priority list for spectrum changed in Punjab & Maharashtra to favour Swan
Dual-tech permits given in 2008 at price discovered in 2001, causing huge loss to exchequer; market-driven process not followed
DoT arbitrarily changed cut-off date for mobile permits to Sept 25, 2007, resulting in select Indian companies such as Swan, Unitech, Loop, Datacom and Shyam getting licences
Losses pegged at Rs 1,76,645 crore
CAG added that the ministry had "flouted every cannon of financial propriety, rules and procedures".
Mr Raja, who resigned from the Union Cabinet on Sunday amid widespread criticism of the UPA government over a raft of corruption scandals, denies any wrongdoing, maintaining that he had only followed existing policies in not auctioning new licences and precious mobile spectrum but offering them on a first-come-first-served basis.
But CAG and Mr Raja's detractors said the policies he referred to were drafted in 2001, when the country's telecom landscape was very different. The country had 45 million mobile subscribers in 2001, but by 2008, the number had vaulted to 350 million.
"The decision to continue to charge entry fee at 2001 level even from the new licensees was not deliberated either in Trai, or Telecom Commission, or Group of Ministers or Cabinet," CAG said in its report.
The auditor put the "presumptive" loss to the exchequer from spectrum allocation to 122 so-called 2G licensees and 35 dual-technology licences (those offering both GSM and CDMA mobile platforms) at Rs 1,76,645 crore. It used the 3G mobile licence auctions conducted earlier this year as the basis of its calculations. The government raised more than Rs 67,000 crore from the 3G auction.
CAG said subsequent deals done by some of the new licensees such as Unitech, Swan and S Tel, which sold stakes to foreign companies at hefty premiums reflecting the true value of the airwaves, proved that they had got the licences at an "unbelievably low price". Several new licensees failed to honour their rollout obligations mandated by the licence conditions and Mr Raja failed to recover Rs 679 crore in penalties, CAG said, seeking to puncture the former minister's claims that granting the new licences on a first come-first-served basis rather than through auctions was to increase competition and reduce tariffs.
Several existing mobile operators have long bemoaned the shortage of radio spectrum vital for running services, and the delays in rolling out services by the new licensees effectively resulted in hoarding of the finite national resource.
The auditor also slammed the process of giving dual-technology licences to companies such as RCOM and Sistema Shyam, saying it "lacked transparency and fairness". These two firms were awarded these permits a day before the policy was officially announced. "The approval violated the Cabinet decision of 2003 to allow additional spectrum at 2001 prices," the report said, adding that such 'deviations' could only be permitted with Cabinet approval.
CAG said one of the most controversial licensees, the erstwhile Swan Telecom, was a front for Reliance Telecom at the time of application, noting that the Anil Ambani-controlled firm owned more than a 10% stake in Swan then, in violation of rules. It accused Swan, now 45% owned by the UAE's Etisalat, of concealing crucial ownership information while applying for the 2G licence, noting that Swan's application had the email address of a Reliance ADA group employee and the group's corporate address.
"It would appear that Swan while applying for the… licences in 13 service areas was acting as a front company on behalf of Reliance Telecom," CAG said.
A spokesman for Reliance Communications said his company had always been in "full compliance with all applicable laws, rules and regulations", and there has been no violation of license conditions at any stage on account of cross-holdings in excess of 10%.
"Our group had no shareholding in Swan Telecom Ltd (now known as Etisalat DB Ltd) at the time of grant of licence to them or any time thereafter, and that issue is accordingly not relevant to our company," the spokesman said. Etisalat DB did not reply to a questionnaire emailed by ET. CAG said Raja's largesse did not just end with the new licensees. It said existing operators too benefited during his tenure as minister, as they received spectrum beyond their mandated limit and in the process causing a loss of Rs 37,000 crore to the government.
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