Lies, wrong facts in prez reference to SC on telecom

Mumbai/New Delhi: Should a reference sent in by the highest office (the President) to the highest court (the Supreme Court) be replete with wrong facts, misrepresentations and even outright lies?

That, unfortunately, is what is being alleged in a penetrating article by Shalini Singh, published by The Hindu on Thursday, on the government’s presidential reference regarding issues thrown up by the Supreme Court in its 2 February judgment on the 2G scam. The judgment cancelled all 122 licences issued by former telecom Minister A Raja and held spectrum as a resource that ought to be auctioned.

While the government is separatelychallenging the Supreme Court’s intrusion into policy-making areas (the hearing is due Friday), the presidential reference, piloted by Communications Minister Kapil Sibal, cleared by the Cabinet and signed by President Pratibha Patil, asks, among other things whether auction is the best method to handle scarce resources like spectrum. This, despite the same question coming up in the review petition already filed in the SC.

But the facts accompanying the presidential reference are less than wholesome. According to the article in The Hindu, it is riddled with half truths, lies and misrepresentations.

MISREPRESENTATIONS:

* The spectrum for cellular and basic service licenses allocated between 1994 and 1997 (referred to as the pre-2001 licenses) was allocated on a first come first served (FCFS) basis without any upfront charges for spectrum.

_Fact:_The question of allocating spectrum on FCFS does not arise, as only two licenses for mobile services and one for basic services were awarded. The second highest bidder had to match the highest bidder, and spectrum was allocated on that basis. Also,apart from the amounts being bid upfront, they were nothing but a payment for 4.4 mhz spectrum that came guaranteed with the mobile license. Without spectrum, the licenses were useless.

*****While describing 17 mobile licenses in 2001, the Reference says these licenses required licensees to pay a one-time, non-refundable license fee.

_Fact:_In the pre-2001 period, there was no one-time entry fee. The upfront bid amount was payable across the life of the license, while in 2001, the government received a one-time upfront entry fee of Rs 1,633 crore for 17 mobile licenses with linked 2G spectrum.

LIES/HIDING FACTS:

* The 22 licences granted for limited mobility in 2001 were on a FCFS basis.

_Fact:_The Reference deliberately hides the fact that unlike in the case of ex-telecom minister A Raja, who processed letters of intent by manipulating the FCFS criteria, the 2001 limited mobility licences received spectrum based on a detailed notification dated 23 March, 2001, subject to investments in infrastructure and meeting rollout obligations. The first to meet the rollout obligations would be the first to get spectrum.

*****Paragraphs 12 and 16 of the Reference claim that mobile licences till 2001 were granted 2G spectrum “with no upfront payment for spectrum”.

_Fact**:**_It is a matter of record that all 2001 licences - 17 mobile and 22 basic - made an upfront payment for spectrum. Furthermore, the government’s bid to persuade the Court that investors were paying for the licence (a mere paper permit) and not spectrum is a non-starter considering the Telecom Regulatory Authority of India (TRAI) on May 11, 2010, valued the Unified Access Services (UAS) licence, inclusive of national and international long distance, as well as ISP services minus spectrum, at merely Rs 20 crore.

*****No separate fee was payable for allocation of spectrum for dual technology licences, which received precious 4.4 MHz of Global system for mobile communication (GSM) spectrum in 2008, on their existing UAS licences of 2003 vintage.

_Fact:_If these companies, primarily Reliance and the Tatas, already held UAS licences in 2003 and they didn’t pay for GSM spectrum in 2008, then what exactly did they pay for? Why would these companies fork out Rs 1,658 crore each if they had already paid for a licence and the GSM spectrum came free?

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RIDICULOUS REFERENCES

**First:**Additional questions about dual technology licenses.

_Fact:_The government is already defending the legality of these licenses in the Supreme Court, so why question the same court over their legality? Also, the SC has already directed the CBI (Central Bureau of Investigation) to investigate the allocation of dual technology spectrum.

**Second:**Should there be a ceiling on acquisition of spectrum?

Fact: This is irrelevant to the cancellation of the 122 2G licenses. It is instead an issue for TRAI and the Competition Commission of India to look into.

According to the Reference, “In terms of the directions of thisHon’ble Court, GoI would be auctioning the spectrum in 2G bands.” TheSupreme Court, however, has given no such direction. The Supreme Courtknows that in the case of 2G, UAS licences with linked 2G spectrumwere auctioned, and not spectrum. Contrary to the Reference, inparagraph 74(iv) of its February 2, 2012 judgment the Supreme Courtstates: “The Central Government shall consider the recommendations ofTRAI and take appropriate decision within the next one month and fresh licences be granted by auction.”

By refusing to do honest homework, the questions raised in theReference places 80 licences - seven from 1994, 22 from 2001, and51 between2003 and 2007 - under the Supreme Court scanner, creating tremendousuncertainty about their future. They also indirectly cast doubts aboutMahanagar Telephone Nigam Ltd. (MTNL) and Bharat Sanchar Nigam Ltd.’s(BSNL) mobile licenses granted in 2001, even while keeping the matteroutside the Reference, since its cellular licences were given withoutauctions and without any entry fee.

Additionally, the Supreme Court’s direction tothe CBI of December 16, 2010, specifically seeks an investigation and a possible FIR into theallocation of dual technology spectrum - at least a large portion ofit. Why dual technology should be included for a third opinion of the Supreme Court is anybody’s guess.

Questioning whether there should be a ceiling on the acquisition ofspectrum also has nothing whatsoever to do with the judgmentcanceling the122 licences. It is a straightforward merger and acquisition (M&A) question for the TRAI and the Competition Commission of India. TheReference then takes a second bite at the cherry by seeking aclarification on whether auction is mandatory for the allocation ofnatural resources - an issue which has already been posed in its review petition filed on March 2, 2012.

It is unlikely that this Presidential Reference will accomplishanything other than generating uncertainty for 6-18 months and thenstarting afresh from exactly the same point as today. Since theReference does not touch upon the 122 licences that have beencancelled, it cannot hope to lessen any of the grief arising from thatjudgment. At the end of this mammoth exercise, the government wouldhave, at best, taken the sector back by two years.