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Updated: February 11, 2011 02:11 IST

Patil committee report criticises ‘first come, first served' policy

Sandeep Joshi
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File photo of Justice Shivraj Patil.
The Hindu File photo of Justice Shivraj Patil.

Underlines need for comprehensive legislation for the telecom sector

The Justice Shivraj Patil Committee has criticised the ‘first come, first served' (FCFS) policy adopted by both the UPA and the NDA governments between 2001 and 2009 for giving telecom licences and allocating 2G spectrum.

Recommending complete transparency in radio waves allocation in future, it pointed out that licences were issued in 2003 on the FCFS basis at 2001 prices, ignoring the Telecom Regulatory Authority of India (TRAI) recommendations that had suggested auction of spectrum.

The committee, in its 143-page report that was made public on Thursday, said the FCFS basis was not justified when there were several applicants, there was competition and the resource was scarce. A company making an application earlier by itself cannot be the basis for selection.

The report underlined need for comprehensive legislation for the telecom sector, as in countries such as Australia and New Zealand, for better spectrum management. It recommended the setting up of an independent level spectrum authority, promoting competition and maximising release of spectrum to society.

“Whenever a contract is to be awarded or a licence is to be granted, there must be objectivity in the procedures for selection. It must be in tune with the requirements of law, statutory norms and prevailing policies of the government. Such procedures must also be reasonable, fair, transparent and certain. The selection of applicants must be by choice and not by chance,” the committee said.

Communications and IT Minister Kapil Sibal formed the committee in December 2010 to look into procedures followed between 2001 and 2009 (covering both the NDA and the UPA governments) in issuing of licences and allocation of spectrum.

The committee suggested that as an initial step, the Department of Telecommunications (DoT) should make public the details of spectrum allocated to each operator and it should be regularly updated as well. “The DoT should put in public domain, spectrum allocation made to various agencies with details of quantum, geographical locations, technology employed, etc. All spectrum allocations should be audited to determine efficient and proper utilisation by the companies.”

The report said that new licences were issued in 2003 on the FCFS basis without any guidelines, overlooking the TRAI recommendations. “On the basis of letter of Chairman of TRAI [Pradeep Baijal] dated November 11, 2003, a decision was taken by the Minister that entry fee for the new applicants would be equal to the entry fee paid by the fourth cellular operator.”

Multi-stage bidding

“In its communication on November 4, 2003, the TRAI had reiterated its recommendations of October 2003 that additional players could be introduced through multi-stage bidding process … It appears that these recommendations were not placed before the Telecom Commission [highest decision-making body of the Telecom Ministry],” the report noted.

“Only after deciding on November 17, 2003 and November 24, 2003, to follow the procedure applicable to Basic Service Licence for granting UASL and also apply the FCFS criteria and to collect entry fee from the new UAS licensees as was paid by fourth cellular operator, the recommendations of TRAI dated November 4, 2003 were approved by the Minister on December 22, 2003.”

Major beneficiaries

The committee also found that at least three operators — Tata Teleservices Limited (TTSL), Bharti Airtel and Idea Cellular — were major beneficiaries of various flip-flops by the government.

“Time was extended time and again for several months for TTSL for grant of BSLs (basic service licences) in Maharashtra, Haryana, Kerala, Punjab and Rajasthan service areas for compliance with LoI [letter of intent],” it said, adding that the extension of time in the absence of any enabling provision in the guidelines could lead to arbitrary exercise of power and favouritism subjectively.

Arbitrary decisions taken by the DoT might have helped operators like Bharti Airtel and Idea Cellular in getting out-of-turn spectrum or in violation of various norms. All these anomalies were carried out by senior DoT officials by “arbitrary” and “selective” manner, the report said.

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