Crossed Wires

The spectrum mess is unlikely to be untied because those most culpable haven’t exactly been cut to size, says SHANTANU GUHA RAY

TWO APOCRYPHAL stories are doing the rounds of the Ministry of Telecommunications in Delhi. The first one, obviously floated by political rivals, suggests a new expansion for the DMK acronym. It’s not Dravida Munnetra Kazhagam; but Delhi Money for Karunanidhi, a not-so-subtle hint at the reported charges and countercharges of financial shenanigans in the ministry in recent spectrum allocations.

The second story, however, is the one that is more interesting — and intriguing. A month ago, the CEO of one of India’s top telecom companies tried to meet up with the Minister for Telecommunications, A Raja, failing to find terms of engagement in Delhi, he flew to New York, where Raja was visiting to attend important meetings. That effort also failed. But the enterprising CEO managed to wangle a seat next to the minister on the return flight.

The rest is history: there was a second meeting, held at the plush Delhi residence of the CEO — and this put a lock on the discussions that had taken place mid-air.

It’s a fact that India’s ongoing telecom saga has meant that lobbying is more vicious and no-holds-barred than in any other

sector. Proof of the high stakes and desperate attempts to grab bandwidth can be seen in the fact that the average spending on litigation between telecom companies in India is more than Rs 100 crore per year, the highest among all sectors.

And it is Raja’s 2007 decision on allocation of spectrum that is in the centre of the storm. It has also reportedly cost the national exchequer a staggering loss of Rs 51,000 crore, by offering low prices for a product that was actually expensive, super expensive.

To counter the volley of charges — Raja claims they are all stage-managed by a cartel of top telecom companies — rocking his boat, the minister has argued that the Telecom Regulatory Authority of India’s (TRAI) recommendations of August 28, 2007 and the government policy of allocating spectrum/new licenses have been the basis of all the decisions he made last year. The DMK has even attempted to play the victim card: Karunanidhi told reporters in Chennai that Raja was targeted because he is a Dalit.

IT’S NOT a view that has resonated with any other political party. “Parties who had secured these licenses have sold or are selling their shares at huge profits,” CPM General Secretary Prakash Karat wrote in a note to the Prime Minister’s Office (PMO). Karat was not the only critic. Between July and August this year, Samajwadi Party leader Amar Singh has written a number of letters to the PMO, raising similar concerns. Completing the troika of complainants was — surprisingly — TRAI chief Nripendra Misra who pointed out — on several occasions — that the minister’s contention is not true and that Raja has merely cherry-picked decisions from the recommendations made by TRAI. “Since January 2008, DoT has allocated start-up spectrum to Vodafone, Idea Cellular, AirAircel, R-Comm, Unitech, Datacom, Tata’s, Swan, Stel, and Loop Telecom. The key question is where did the start-up spectrum which was once declared ‘not available’ come from?” asked Amar Singh, referring to the 120 precious 2G licenses that went for a 2001 price of Rs 9,000 crore in January and then, subsequent equity deals struck by new licensees, Unitech and Swan, that reveal that their real value was closer to Rs 60,000 crore.

Singh says according to licensing conditions, operators are entitled to only 6.2 Mhz spectrum per circle. However, dominant operators have cornered more than 54 Mhz: this excess saves them thousands of crores in capital and operating expenditure. “Why is the government bestowing enormous cash benefits on these companies?” asked Singh.

No one is answering. Raja is incommunicado; so is the TRAI chairman. Misra, who has alleged privately that Raja messed the show

because he did not consider his recommendations, also did not talk of the firstcome- first-served policy that Raja implemented to allot spectrum to newcomers. At the same time, after announcing a date till when applications for fresh spectrum would be entertained, Raja — in a move that baffled many — suddenly announced a cut-off date well before this, and then opened up a payment window for a few hours at very short notice. “All of this enabled those who were in the know, or very lucky, to grab top positions in the queue,” Anil Kumar, who runs India’s only telecom watchdog NGO, told TEHELKA.

Ministry insiders say the minister also disregarded the recommendations on charging dual-technology firms like Reliance Commu nications a higher usage fee, considering that they were getting more spectrum compared to others.

Still, can Raja be the only one in the dock for the crisis? Kumar disagrees. He feels if Raja has to take the flak for messing recommendations made by Misra, the latter must take some blame for being unclear on some of the most critical issues. Consider the case of issuing GSM spectrum to CDMA-mobile firms like Reliance, where Misra said it could be done as long as the firm paid the same licence fee as a GSM firm. And while mobile firms were using spectrum in the 800/900/1,800 bands, the TRAI chairman recommended auctions in each band except these ones, and said while an auction was one way to assess market prices for spectrum, an annual spectrum charge was also another way to assess its economic value.

Fundamentally, Misra remained unclear as to how to price spectrum but — when charged — he defended himself by saying the TRAI did not recommend the standard options because of the prevailing practice and the overriding consideration of level-playing field that exists in the context of 800, 900 and 1,800 MHz.

It was a statement that aggravated the problem. Again, on the issue of inter se priority of allocation between those in the queue, the TRAI chairman put the ball in the DoT’s court, saying it should decide. But ministry officials claim that his increasing the number of subscribers required for extra spectrum by nearly four to five times prompted the ministry to not allot fresh spectrum to existing players — and instead allot it to firms at bargain-basement prices.

Interestingly, Misra realised his mistake days after the ministry issued letters of intent (LoIs) in January this year for 120 circles and wrote to the telecom secretary, clarifying that the existing policy on new entrants was, actually, settled more than five years ago (in 2003) and it was clear that new entrants could only come in through auctions. However, to date, no one has asked Misra why he never put this in his original recommendations. If that was done, the ministry could have easily cancelled the licenses because only LoIs had been issued.

With elections just months away, the Prime Minister is unlikely to axe the minister. Neither has Dr Singh admonished Misra for being less than clear in his recommendations. All that has happened is that while the minister and the TRAI boss remain connected, the airwaves and their operators are hopelessly entangled.