2G SPECTRUM SCAM

WHAT IS SPECTRUM?

Spectrum is specific range of electromagnetic wavelength, which is used in radio, TV broadcasting, mobile communications and internet facility. For AM 540KHz, Cable TV 145-860MHz, 3G 2100MHz, broadband 2300MHz spectrums are used.

WHAT IS 2G

2G is short for second-generation wireless telephone technology.

The wavelength between 800-1900MHz is called 2G spectrum, which is useful for mobile communication technology.

WHAT ARE THE USES OF 2G SPECTRUM?

Second generation networks are digital. They prevent eavesdropping to some extent. 2G devices emit less radiation. The penetrative levels are high. Text messaging, e-mail sending are made possible due to digitalization. GPRS,EDGE technologies are up-gradation in 2G technology. MMS facility is initiated. Pocket internet is made possible.

WHO ALLOTS 2G SPECTRUM TO COMPANIES?

As it is national property, people have right over it. As people have elected their representatives, they have the power to allocate this resource. As government is divided for administrative purposes, it is the onus of telecommunication ministry to allocate to various telecom companies and the income generated should be used for welfare of people.

WHAT IS 2G SPECTRUM SCAM

In 2008,the UPA, issued 122 new telecom licenses to several domestic companies with little or no experience in telecom sector, and at a price set in 2001.

The shortfall between the money collected and the money which the law mandates to be collected is 1.76 lakh crore rupees.

2G SPECTRUM CASE: A CHRONOLOGY

- Oct 22, 2009: The Central Bureau of Investigation (CBI) files a first information report (FIR) against unidentified officials of the department of telecommunications on the 2G spectrum (airwaves) auction, based on a reference from the Central Vigilance Commission.

- November first week, 2010: Media publishes contents of the Comptroller and Auditor General (CAG) report on the 2G spectrum auction. The CAG said the public exchequer suffered a notional loss of Rs.1.76 lakh crore ($40 billion) due to faulty auction procedure under the then communications minister Andimuthu Raja in 2008.

- Nov 9, 2010: Protests start by the National Democratic Alliance (NDA), the Left and other parties, which demand a joint parliamentary committee (JPC) probe into the spectrum scandal which washed away the five-week winter session of parliament.

- Nov 14, 2010: Raja submits his resignation to Prime Minister Manmohan Singh in New Delhi. Claims he did no wrong.

- Nov 16, 2010: CAG report on 2G spectrum allocation tabled in both houses of parliament amidst uproarious scenes.

- Dec 8, 2010: The CBI raids the house of Raja and premises of former aides Siddharth Behura and R.K. Chandolia in New Delhi. It also raids houses and offices of Raja's relatives, associates and some journalists and social workers in Tamil Nadu linked to the DMK and Raja. The CBI claims recovering incriminating documents.

- Dec 15, 2010: The CBI raids the houses and offices of Niira Radia, a corporate lobbyist linked with Raja. She is subsequently questioned by the CBI several times.

- Dec 24-25, 2010, and Jan 31, 2011: The CBI questions Raja in New Delhi.

- Feb 2, 2011: The CBI arrests Raja, Chandolia and Behura.

- April 2, 2011: The CBI files charges against nine people and three firms -- Raja, Chandolia, Behura, Swan Telecom promoter Shahid Balwa, director Vinod Goenka, Unitech director Sanjay Chandra and three officials from the Reliance Anil Dhirubhai Ambani Group -- Gautam Doshi, Hari Nair and Surendra Pipara.

- April 20, 2011: Special city court denies bail to Goenka, Chandra, Doshi, Nair and Pipara.

- April 25, 2011: In a major embarrassment for Karunanidhi, daughter Kanimozhi named co-conspirator, along with Sharad Kumar of Kalaignar TV, Karim Morani of Cineyug Films, and Asif Balwa and Rajiv B. Agarwal of Kusegaon Realty.

- May 20, 2011: Kanimozhi's bail plea rejected. She is sent to judicial custody in Tihar Jail. Sharad Kumar also sent to jail.

- June 20, 2011: The Supreme Court refuses Kanimozhi's bail plea. - July 6, 2011: The CBI files a status report in the Supreme Court,

alleging that Maran had forced telecom promoter C. Sivasankaran to sell his Aircel stake to the Maxis group considered close to his family.

- July 7, 2011: Maran resigns from the union cabinet.

CORPORATION INVOLVED

WHO ALL BENEFITED FROM THIS SCAM ?

2G spectrum was allocated beyond contracted quantity to 9 firms including Bharti, Vodafone, Idea, BSNL, Reliance, Aircel," the report said.Niira Radia is said to be involved. Read her details.

Department of Telecommunications (DoT) circumvented the rules to help Swan Telecom, which effectively acted as a front for Reliance Telecommunications. The charges in the CAG report are that Swan should not have been considered for a license because Reliance Communications held 10.7% stake in Swan - and according to the rules, a telecom operator cannot own more than 10% stake in another telecom company operating in the same service area. "Email ID of Swan Telecom was shown as that of a Reliance ADA group official

Another big beneficiary of the 2G spectrum allocation was Unitech Wireless, which had no experience in the telecommunication sector.

After Unitech got the license for a throwaway price of Rs. 1,661 crore, it sold 60 per cent stake to Telenor Asia for a whopping Rs. 6,200 crore

OTHERS IN THE NET DMK chief M Karunanidhi's daughter and MP Kanimozhi who

has been named by the CBI as a co- conspirator with A Raja Shahid Balwa, the promoter of Swan Telecom, who the CBI

believes had a central role in the 2G spectrum scam. He has been accused of colluding with former Telecom Minister A Raja by allegedly channelizing kickbacks Raja got from the spectrum sale into the real estate

Unitech chief Sanjay Chandra and DB Realty founder Vinod Goenka who have been chargesheeted for cheating and conspiracy

Three senior executives of Anil Ambani controlled ADAG, Gautam Doshi, Hari Nair and Surendra Pipara. All these are currently lodged in Tihar Jail

Former telecom secretary Sidharth Behura, who allegedly shut counters to physically block other telecom companies, faces the same charges as Raja. And so does Raja's Personal Secretary RK Chandolia

INVESTIGATING AGENCIES

Comptroller and auditor

General of India

Central Bureau of Investigation

Central Vigilance Commission Directorate of

Enforcement

COMPTROLLER AND AUDITOR GENERAL OF INDIA (CAG)

The Comptroller and Auditor General of India (CAG) said it has submitted to the government the report on the 2G spectrum allotment that is presumed to have caused a revenue loss of up to Rs. 1.76 lakh crore.

CAG has accused the telecom ministry for undervaluing 2G spectrum, sold to new players in 2008, and held that the allotment price was not realistic, which has caused a revenue loss of up to Rs. 176,700 crore to the government.

The report is also believed to have castigated telecom minister A Raja for ignoring the advice of finance and law ministries on allocation of 2G spectrum to benefit a few operators.

It is also believed to have criticized telecom regulator TRAI standing as a helpless spectator when its recommendations were being ignored or misused.

The CAG report said the price at which the spectrum was allotted in 2008 was based on 2001 prices, which was quite low and has resulted in a loss to the government exchequer.

MEDIA PERSONS ACCUSED

Nira Radia, a corporate lobbyist whose conversations with politicians and corporate entities were recorded by the government and leaked creating the Nira Radia tapes controversy

Barkha Dutt, an NDTV journalist alleged to have lobbied for A. Raja's appointment as minister

Vir Sanghvi, a Hindustan Times editor alleged to have edited articles to reduce blame in the Nira Radia tapes

Rajdeep Sardesai, a CNN IBN senior editor

THE ROLE OF KALAIGNAR TV

One of the companies named by the CBI in the 2G scam - Swan Telecom - allegedly sent Mr Raja a Rs. 214-crore kickback that was routed through a maze of companies but rested finally with Kalaignar TV channel in Chennai that is owned mainly by Kanimozhi and Dayalu Ammal. Together, they have 80% stake in the company. Sharad Kumar, the Managing Director of Kalaignar TV, owns the balance and has also been accused of conspiring with Mr Raja.

REASONS FOR 2G SCAM:

1. Political reasons:

Co-alition governments are making central governments weaker to take decisions. A.Raja, who was main accused, should have been removed when he was targeted by main political parties, but he was given for second time with the fear that DMK might withdraw its support. This decision was because of co-alition political parties.

High spending in elections is making them resort to corruption which is leading to scams. After huge expenditure, when they are elected they are recovering the money they have put in elections. They are not taking care of people by whom they are elected.

No regulations for Members of Parliament is also reason for their corruption leading to scam. They have some benefits as they are representatives of the biggest democracy, which are being misused by them.

2. Business reasons:

Businessmen sponsor politicians when they are in fray. After election, they seek some concessions from politicians for their businesses, if they are elected. Politicians, being workers of people, work for these businessmen in their offices. Businessmen sponsoring politicians, businessmen turned politicians are in forefront of making scams.

3.Media reasons:

Growing media activism is throwing open the gates for crooked and worm-natured people resort to it. Commercialization of newspapers is the prime reason for having scams related to them. Second reason is that they are being honored and having direct relations with political leaders leading to connive in their activities.

4. Bureaucratic reasons:

The steel frame was turned into wooden frame long ago. It is at the mercy of politicians. Independence of civil service is no more. They are only submissive to their political bosses. They are afraid of being transferred if they do not cooperate . There are five to six transfers in a year related to honest officer makes shiver others also. Courts do not interfere in the issues of transfers. Administrative tribunals can not help. Most of the Civil servants are silent spectators and coming to Mr. Behura, who has been arrested in 2G scam, was telecommunication secretary, not for his dishonesty but only signing of 100 letters of issuance licenses done within days of time.

THE POLITICAL CRISIS AFTER THE SCAM

The stand-off between the government and the Opposition over 2G scam continues. The Opposition wants a Joint Parliamentary Committee (JPC) to investigate the 2G scam.

Parliament has not functioned at all this winter session - the Opposition says it won't let the House get to work till a JPC is announced.

Niira Radia also seem to be involved in big way to 2G spectrum scam. She is a corporate lobbyist for big corporate leaders like TATA group, Reliance Industries etc

SHORTFALL OF MONEY

A. Raja arranged the sale of the 2G spectrum licenses below their market value. Swan Telecom, a new company with few assets, bought a license for Rs. 1537 crore. Shortly thereafter, the board sold 45% of the company to Etisalat for Rs. 4200 crore. Similarly, a company formerly invested in real estate and not telecom, the Unitech Group, purchased a license for Rs. 1661 crore and the company board soon after sold a 60% stake in their wireless division for Rs. 6200 crore to Telenor.

The nature of the selling of the licenses was that licenses were to be sold at market value, and the fact that the licenses were quickly resold at a huge profit indicates that the selling agents issued the licenses below market value.

Nine companies purchased licenses and collectively they paid the Ministry of Communications and Information Technology's telecommunications division Rs. 10,772 crore,The amount of money expected for this licensing by the Comptroller and Auditor General of India was 1,76,700 crore.

ADVANTAGES

The lower power emissions helped address health concerns.

Going all-digital allowed for the introduction of digital data services, such as SMS and email.

Greatly reduced fraud. With analog systems it was possible to have two or more "cloned" handsets that had the same phone number.

Enhanced privacy. A key digital advantage not often mentioned is that digital cellular calls are much harder to eavesdrop on by use of radio scanners. While the security algorithms used have proved not to be as secure as initially advertised, 2G phones are immensely more private than 1G phones, which have no protection against eavesdropping.

DRAWBACKS

In less populous areas, the weaker digital signal may not be sufficient to reach a cell tower. This tends to be a particular problem on 2G systems deployed on higher frequencies, but is mostly not a problem on 2G systems deployed on lower frequencies.

Analog has a smooth decay curve, digital a jagged steep one. This can be both an advantage and a disadvantage. Under good conditions, digital will sound better. Under slightly worse conditions, analog will experience static, while digital has occasional dropouts.

While digital calls tend to be free of static and background noise, the lossy compression used by the codec's takes a toll; the range of sound that they convey is reduced. You will hear less of the tonality of someone's voice talking on a digital cell phone, but you will hear it more clearly.

RECOVERY CPI(M) has reiterated its demand for

cancellation of the licenses of those private Telco's who got the spectrum through the first come first served formula and recover the losses.

Com. Prakash Karat, General Secretary, CPI (M) in a statement said:” It is not enough to arrest a few persons. The Government should cancel these licenses and auction the spectrum so that the revenue lost can be recovered.”

CPI(M) was the first to point out to this biggest scam in the country in 2008 itself. Its continuous exposal and also of the other opposition parties had compelled the Government to dismiss Communications Minister A.Raja and appointment of JPC to inquire in the matter.

INITIATIVES TO AVOID SCAMS (REMEDIES):

Setting up of preventive mechanism. Prevention is better than cure. Preventing scams in bud stage is very important.

Ministers, civil servants relation to be reformed.

Protection of civil servants. There should be a limit for transfers within a year.

Stopping the culture of sponsoring politicians by businessmen. It should be dealt seriously.

Searching ways by Election Commission sponsoring for contestants which can bring ethical and moral persons to political arena.

Saving the media from rotting through checks and balances.

People should be aware of consequences of weak governments and should enable strong governments.

RECOMMENDATIONS

TRAI Links Excess 2G Spectrum Price with 3G Auction Price – Big Mess

TRAI in its recommendations has surprised everybody that GSM spectrum assigned beyond 6.2MHz up to 8MHz to be charged at current (linked to 3G auction) price and at 1.3x current price beyond 8MHz . It has recommended no auction of 2G spectrum even as subscriber linked criteria for allotment done away in favor of roll out obligations.

OTHER KEY RECOMMENDATIONS OF TRAI ARE

900MHz spectrum to be valued at 1.5x Current price; 1800MHz valued at 1x ‘Current’ price

No cap on the number of operators/circle as in future spectrum should be delinked from UAS licenses

Uniform license fee of 6% from 2013-14 Promoter lock-in of 3 years removed M&A approval only if merged entity has not more than 30%

of circle subscriber base and/or AGR. Spectrum cap for merged entity still kept at rather low levels

of 14.4/10.0MHz (GSM/CDMA). Further, merged entity should pay 3G-linked price for spectrum >6.2MHz, as well as a transfer charge at 5% of the difference between transaction price and total spectrum price

Impact of TRAI Recommendations on 2G Spectrum – The recommendations are pro-new entrants, and pro-CDMA incumbents (dual technology operators) like Reliance Communications and Tata Teleservices.

TRAI has committed a mistake of earlier recommending Subscriber linked Spectrum allocation policy and now trying to cover it under the 3G auction price. Well, retrospect charging for spectrum creates uncertainty in a sector already bleeding by irrational tariffs. Further, what is the basis of using 3G bids for pricing 2G spectrum, as the former are driven more by scarcity and lack of a transparent spectrum roadmap.

CONCLUSION:

Whenever a scam raises, Indian government is dealing with scam rather than reasons behind it.

Loopholes in system need to be corrected in order to avoid these scams. If these are not dealt properly so many scams are on the way for us.

A perfect policy making and new blood in political veins only can help India to be out of scam era.