The only direction given by him was that Ministry must act in a fair manner

The government on Friday clarified that Prime Minister Manmohan Singh gave no directions on the 2G spectrum allocation, but claimed that in the run-up to the allocation, he received several suggestions to consider changing the National Telecom Policy in 2007, including switching to auctions from the first come first served basis.

The Prime Minister wrote to the then Telecom Minister on November 2, 2007, forwarding a summary of the suggestions received, requesting him to consider all these aspects carefully. “This has been wrongly interpreted in the report of the Comptroller and Auditor General as a direction to act in a particular manner on the issue of pricing. The only direction given by the Prime Minister was that the Ministry should act in a fair and transparent manner and keep him informed,” the Ministry has said in a note.

The issues raised in the note forwarded by the Prime Minister were responded to by the Minister, who pointed out that in the interest of ensuring a level playing field between the existing operators, who had obtained licences and spectrum at very reasonable rates, and the new operators, and to ensure that the new entrants could provide effective competition for the healthy growth of the sector, it would be appropriate to continue with the extant policy, the Ministry said.

The Prime Minister was also informed that the issue of pricing of spectrum was discussed extensively between the Ministry of Finance and the Department of Telecommunications (Telecom Ministry) in line with the earlier decision of the Cabinet in 2003, which had left the issue of spectrum pricing to be decided by the two Ministries. The Minister for Telecom also consulted the then External Affairs Minister, who was the chairman of the Empowered Group of Ministers on the spectrum issues.

Based on these consultations, the Prime Minister was informed that the Finance Minister and the DoT, after considering all options, had come to an agreement that the 2G pricing should continue as before while the 3G spectrum would be auctioned. The Prime Minister accepted this outcome on the spectrum pricing, the note said.

Emphasising that the government's decision on the spectrum pricing was not merely a mechanical continuation of the policies put in place by the previous government, the official note said it was continued on merits to provide a balance between multiple objectives, including increasing tele-density, promoting competition, and ensuring a level playing field. The Prime Minister was informed of the Telecom Regulatory Authority of India report of August 2007 in which it recommended that the spectrum in 2G bands (800, 900 and 1800 MHz) should continue to be priced as before for the new entrants and that in future, all the spectrum, excluding spectrum in 2G bands should be auctioned.

“It may be thought that the decision to auction 3G spectrum makes out an automatic case that the 2G spectrum should also have been auctioned. This would not be a valid conclusion,” the government said.

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