State of the Union: So, what's the story behind 2G scam'?

A Special CBI Court in New Delhi adjudicated that there was no criminal culpability or policy malfeasance in the allocation of 2G licences and spectrum given to private players by the Department of Telecommunications (DoT) on January 10, 2008, thus bringing down the curtains on one of the most high-profile corruption trials based upon extraordinary allegations made by a constitutional body — the Comptroller and Auditor General of India (CAG) — that have rocked India from November 2010 onwards.

The 2G scam, as it was colloquially referred to by the media and the Opposition, came to light on November 16, 2010 when the then UPA government tabled a CAG report in Parliament. The report alleged that a “presumptive” loss of Rs 1,76,645 crore was caused to the exchequer by not auctioning Spectrum that was given bundled up along with 122, 2G licences and 35 dual technology licences in 2007-08 to private telecom operators. The sheer scale of the charges was so astounding and the figures so astronomical that the media lapped it up without even a second glance at the intrinsic absurdity manifest in the nomenclature “presumptive loss”. No one asked a basic question how could loss be presumptive?

The report set in motion a tragic train of events that wrecked the lives of innocent people, ruined reputations, brought profitable companies to their knees and tarnished the image of the UPA government and the country. It also derailed the country’s economy that had managed to survive the global economic meltdown of 2008. The insanity of the media trial was so grotesque that logic and reason just disappeared into thin air. Any attempt to logically answer the preposterousness of what had been alleged in the CAG report was met with disdain, sarcasm and downright contempt. Sanctimonious and hypocritically self-righteous television anchors screamed from their bully pulpits night after night playing judge, jury and the prosecutor, pronouncing guilt and dispensing kangaroo court justice much like lynch mobs.

Some of us, who were at the receiving end of this relentless assault as the  national spokespersons of the Indian National Congress, knew that the CAG report was a house of cards that would eventually collapse but in those days of mass hysteria, manufactured rage and media trials sanity was at a premium. Later, as a member of the Joint Parliamentary Committee, constituted to examine matters relating to allocation and pricing of telecom licences and spectrum, it became more than evident to me, especially after a rigorous cross-examination of CAG officials by the “quixotic” Vinod Rai, that the conclusions arrived at in the CAG report alleging a presumptive loss of 1.76 lakh crore were not substantiated by facts. However, the wrecking ball continued to roll unchecked.

Today, it may be appropriated to ask a fundamental question: What was all this about? The answer is simple: it was a corporate war that went rouge. The story began in 1994 with the announcement of the National Telecom Policy that opened the sector to private participation in the telecom sector. Initially, eight private operators were granted licences for a period of 10 years to operate in the four metros of New Delhi, Mumbai, Kolkata and Chennai through a process called a “beauty parade”. Subsequently, in December 1995, 34 CMTS licences were granted based upon an auction for 18 telecommunication circles for a period of 10 years. Six Basic Telephone Service (BTS) licences were awarded in 1997-98 by way of auction for a period of 15 years. A third licence was given to the public sector MTNL in the metros and BSNL in the other telecom circles, to launch mobile telephony services.

A bulk of these private operators were unable to fulfill their contractual obligations following which the then NDA government allowed them to migrate from a licence fee to a revenue-sharing model through a migration package in 1999 and the new telecom policy extended the period of their licences from 10 to 20 years. This migration package caused an actual revenue loss '42,080.34 crore to the government. In 2001, a fourth cellular licence was auctioned for a pan-India price of '1,651 crore.  Subsequently, the telecom sector went through many upheavals; the telecom licences became technology neutral with the introduction of the universal access service licensing regime in 2003 that stipulated that in future telecom licences and bundled spectrum would be granted on a “first come first serve” basis on the price discovered in the fourth cellular auction.

Between November 2003 and the March 2007, 51 Universal Access Service (UAS) licences were issued. The inflection point came in April 2007 when the DoT made a reference to the Telecom Regulatory Authority of India (TRAI) seeking it’s opinion on a host of issues, including limiting the total number of service providers in each telecom circle. At that time, there were 53 UAS licences’ applications pending disposal with DoT. This reference created a panic in the industry. Between April and August 2007, by the time TRAI gave it’s recommendations, 167 new applications for telecom licences had been received. After the recommendations came in, the government set October 1, 2007, as the last date for submitting applications. By this time there were a total of 575 applications. That is when it got convoluted. The existing players who had got the licences and bundled spectrum along with it, first in 1994-95 and then through the fourth cellular auction in 2001, realised that after their licences expire (between 2014&15 and 2021 respectively) these would not be renewed at the 2001 prices, while new comers who would get their licences in 2007-08 at the 2001 price would continue till 2027-2028.

Thus commenced a huge campaign of calumny in which the CAG also became a participant by manufacturing the “presumptive loss theory” in the grant of bundled spectrum to new licencees at the administered prices, conveniently sweeping under the carpet that all telecom licencees between 1994 & 2007 were also given bundled spectrum at administered prices along with their licences. That is why when the matter finally went to the trial court, it found no criminality and much less policy malfeasance in the decision of the DoT.