Spectrum: Dead Mahajan gets blamed for favouring Bharti, Voda

Pramod Mahajan, Communications Minister in the Vajpayee government, is no more, but former Telecom Secretary and retired IAS officer Shyamal Ghosh has blamed him for allocating additional spectrum to Bharti Airtel and Vodafone (then known as Hutchison Max) at throwaway rates.

The Central Bureau of Investigation (CBI) has, however, called this a conspiracy between Pramod Mahajan, Shyamal Ghosh, Director General (Telecom) JR Gupta, Bharti Airtel and Vodafone to cheat the government of revenues.

The ‘proposed’ chargesheet, which was submitted to the law ministry for its legal opinion last week, does not name any promoter or official of Airtel or Vodafone for the conspiracy. Both the companies were merely termed as ‘beneficiary’ companies. The CBI will take a final view on the chargesheet after obtaining legal opinion from the ministry.

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Pramod Mahajan was Union Communications Minister during 2001-2002, when the “conspiracy” was allegedly hatched. The CBI believes that he and Shyamal Ghosh swiftly cleared the allocation of additional spectrum to Bharti Airtel and Vodafone on a single day.

The CBI alleges that the two telecom operators pushed the Cellular Operators’ Association of India (COAI) to seek more spectrum on their behalf on the pretext that the “6.2 Mhz allocated earlier was inadequate for meeting the grade of services and coverage needed in high-density areas like Delhi and Mumbai.’’ COAI asked for additional spectrum for Bharti Airtel and Vodafone in the 900 Mhz and 1800 Mhz bands through a representation.

[caption id=“attachment_400009” align=“alignleft” width=“380”]  Pramod Mahajan was Union Communications Minister during 2001-2002, when the “conspiracy” was allegedly hatched. AFP[/caption]

The Telecom Ministry set up a technical committee to consider this representation. The committee’s findings revealed that these mobile service providers had 6.2 Mhz of spectrum in Delhi and Mumbai and the allocation was sufficient to maintain a subscriber based of about nine lakh per operator. The committee recommended that the operators should strengthen their infrastructure (antenna diversity, etc) to optimise the use of 6.2 Mhz spectrum, as their subscriber base was only five lakh per operator at that time.

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Worse, the technical committee had also recommended that there was no need to allocate additional spectrum for another three years. Moreover, the ministry should levy “suitable incremental spectrum charges at a higher rate” whenever more spectrum was needed.

Bharti Airtel and Vodafone apparently wanted an easy way out and did not want to invest more on infrastructure. Thus they continued lobbying for additional spectrum. Both the companies were initially allocated 4.4 Mhz of spectrum and then were upgraded to 6 Mhz. The Telecom Ministry had initially charged two percent of Adjusted Gross Revenue (AGR) for 4.4 Mhz of spectrum and one percent of AGR for additional spectrum of 1.8 Mhz.

Despite the technical committee’s findings, Shyamal Ghosh put up a note, apparently on Pramod Mahajan’s advice, dated 10 January 2002, saying that additional spectrum may be allocated in Delhi and Mumbai in 1800 Mhz band and proposed that an additional allocation fee be charged instead of increasing revenue share.

The CBI alleges that the conspiracy reached the final stage on 31 January 2002, when JR Gupta, in a note, proposed allotment of additional spectrum beyond 6.2 Mhz in Delhi and Mumbai in 900 Mhz band, as the existing cellular operators had reported congestion as well as drops in voice quality in these areas. Shyamal Ghosh signed in favour of Gupta’s note on the same day and Pramod Mahajan too joined them by giving his final nod the same day.

Shyamal Ghosh did not “even wait for the comments of the then Member (Finance) who usually acted as one of the representatives of the finance ministry for deciding the percentage of AGR to be charged from the operators on account of allocation of additional spectrum beyond 6.2 Mhz.’’

“The aforesaid public servants moved the file in such patent haste and in a designed manner that key persons in charge of various important roles did not have an opportunity to see the file for their comments. Accordingly, the Wireless Advisor was bypassed for the reason that he was retiring on the said day and Member (P)/(F) was bypassed mentioning that he was out of office, in spite of the fact that he was available in the office till afternoon on the said day (31 January 2002),’’ the CBI said.

Pramod Mahajan too cleared the file allocating additional spectrum up to 10 Mhz virtually without any charge on 31 January 2002, causing a loss of Rs 508 crore to the government exchequer. The Department of Telecom (DoT) did rectify this anomaly in 2008 and imposed additional charges for the additional spectrum. Calling it hoarding of spectrum at the government’s expense, the CBI is now awaiting legal opinion before moving its chargesheet.