Caught In A Local Loop

The ghost of the wireless in local loop (WLL) controversy is raising its head again. Even as Reliance Infocomm is wooing consumers by lucrative offers, its WLL service is itself under a cloud due to the recent Supreme Court stand. Acting on a PIL, the apex court issued a notice to the Centre last week based on the charges that former Union minister for communications Pramod Mahajan had favoured Reliance to launch its WLL service four years ago.

Filed by an NGO, the PIL had charged Mahajan with allowing Reliance Infocomm to go ahead with its WLL service and also offer full mobility (WLL was supposed to be a limited mobility service) without paying the requisite licence fee as was applicable to other mobile service operators. This move by the then minister Mahajan, stated the PIL, led to a loss of Rs 1,100 crore to the exchequer. It added that this was done despite the fact that the telecom regulator, trai, had specifically disallowed the use of the technology—mobile switching centres—which allowed the WLL players to expand their services to connect different circles.

In return for the favour, Reliance Infocomm allotted one crore of its shares to Mahajan's family friend, Ashish Deora, through three front companies—Fairever Traders and Consultants, Softnet Traders and Consultants and Prerna Auto at

Re 1 per share. In comparison, Reliance Industries, which owned a substantial chunk of Infocomm at that time, paid Rs 55 per share. The PIL also claimed that the shares were taken back from Deora only after the issue was exposed by the media during the fight between the two Ambani brothers.

It has been alleged that Mahajan was the real beneficiary of the Deora shares asIOL Broadband—where Deora was a director—bailed out Integral Production which is owned by Mahajan's wife and son. Mahajan has denied doling out any favours to Reliance and has said that all the relevant files and documents were available with the dot to investigate the matter.