What Is Spectrum?
Radio waves used for mobile communication, a scarce, precious and always contentious resource.
How Has It Become Controversial?
- October 2007: Reliance Communications gets a GSM licence, makes it eligible to get spectrum immediately.
- November 2007: Communication Minister A. Raja announces that 2G telecom licences with start-up spectrum would be sold on a first-come-first-served basis. 575 applications come in from 46 players.
- January 2008: 120 licences given to 9 players, many without telecom experience.
- September 2008: Swan Telecom sells 45% stake to Etisalat for $900 million (had paid Rs 1,537cr, so an overall gain of 586%). Swan has no telecom infrastructure, subscribers.
- October 2008: Unitech sells 60% stake to Telenor for Rs 6,120 cr (had paid Rs 1,651 cr, so total gain of 618%). Unitech has no telecom infrastructure, subscribers.
What Are The Monies Involved?
- All-India licence sold at 2001 value of Rs 1,651 cr. Market estimates its true worth at Rs 6,000 cr today.
- At current valuations, Rs 55,000-Rs 60,000 cr loss to the government because of low sale price of licence, spectrum.
Why Was Spectrum Sold At 2001 Values?
- Minister Raja says he has followed norms laid down by the telecom regulator TRAI, would have faced litigation if the government had auctioned the spectrum.
- TRAI chairman Nripendra Mishra had last year told Outlook that the licence fees definitely needed a relook.
Who Has Gained?
- New licence owners: Unitech Builders, Parsvanath Properties, Venugopal Dhoot’s Videocon, Swan Telecom and older players Shyam Telelink, HFCL, Idea Cellular, Spice and Tata.
- Anil Ambani’s RComm was allegedly given preference in spectrum allocation in an earlier round in 2007.
- Existing players like Sunil Mittal’s Airtel, Vodafone, Idea have also been charged with hoarding excess spectrum, worth about Rs 20,000 cr.
What's The Politics?
- It's election time, UPA passes the buck to ally DMK, under whom the communications ministry vests.
- Raja offers to resign; DMK sticks to its guns.
- The CPI (M) cries foul, BJP calls for a CBI probe.
- Samajwadi Party's Amar Singh makes a pitch against older telecos hoarding spectrum.
What Happens Next?
- Govt mulls a lock-in period of three years for new licences. But as Unitech and Swan have sold stakes, so others may go to court.
- Other new licencees may also sell out.
- A PIL challenging new license allotment filed in Delhi HC, which seeks explanation from DOT.
- Technically, govt can revoke new licences, but unlikely.
- Govt mulls one-time spectrum fee for existing players.
- Under pressure, Raja and TRAI may become scapegoats.
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