The Supreme Court on Monday questioned the Centre why it had not auctioned the entire spectrum vacated by the February 2 order cancelling 122 licences. The court made it clear that it would not allow government to withhold even 0.1 per cent of spectrum from not being auctioned.
A Bench of Justices G.S. Singhvi and K.S. Radhakrishnan while refusing to take on record the affidavit filed by an under secretary in the Department of Telecommunication on the conduct of 2G auction held on November 12 took exception to the Centre taking the `2G spectrum case’ casually.
Justice Singhvi told senior counsel P.P. Rao appearing for the Centre, “all spectrum after the cancellation of the licences must be auctioned. Why have you not auctioned all spectrum. Government is very casual in dealing with the matter.”
Mr. Rao submitted that 900 MHz frequency spectrum licence was never allotted in 2008 as they were issued much earlier. These licences were due for renewal in 2014 when they would be auctioned and government would get more revenue.
Justice Singhvi however drew the attention of Mr. Rao TRAI’s recommendations that all the three frequencies of 800 MHz, 900 MHz and 1800 MHz must be auctioned and the reply of the then Telecom Minister A. Raja in this regard to the Prime Minister Manmohan Singh.
Justice Singhvi told Mr. Rao “ Keep in mind that withholding of spectrum, even 0.1 per cent would not be acceptable. When government was seeking time it should have informed us that only a part of the spectrum will be auctioned. At no point of time this court was informed that the auction was only for 800 and 1800 MHz band. It is unfair on the part of the government to not represent facts correctly.This affidavit cannot be accepted. It has been filed by an Under Secretary level officer. Our earlier order clearly said that affidavit must be filed by Secretary-level officer. This is a deliberate action on the part of DoT. On earlier occasion the court had unequivocally rejected affidavit filed by an Under Secretary. It is unfortunate that the same mistake has been done again.”
Attributing the reasons for poor response Mr. Bhushan in a note submitted to the court said “in 2008 the teledensity (mobile + fixed) was 23%, which has gone up to 77%. This will touch about 100% when a new operator, who gets licence now, rolls out its services in 2-3 years time. Therefore, the addressable market size gets reduced. The Reserve Price was not adjusted to the futuristic scenario. Even when in 2009, the 122 licenses were resold (private auction), the company with spectrum only was valued at Rs 10,000 crore. Therefore, the Reserve Price of about Rs 8,000 crore would have been the right choice. There was no scope for expansions for any new operators in certain saturated areas. Therefore, we have not seen any demand for Delhi and Mumbai because of high spectrum Reserve Price. Only in Bihar, the demand exceeded availability, and all the 11 blocks were sold out. The existing operators had vested interest in the failure of this auction because they were required to match this price when their licenses come up for renewal. Majority of the existing GSM operators who got their licenses in 1994/1995 for 20 years, have already applied to DoT (3 years before the expiry). Even all those operators, who have excess spectrum, were required to pay at this auction determined rates. So, they also had vested interest in its failure. That is the reason they did not participate.”While refusing to accept the affidavit the bench directed the DoT Secretary to file a fresh affidavit in two days and directed listing the case on November 26.
On the plea made by counsel Prashant Bhushan for a probe against former Telecom Secretary Shyamal Ghosh; Senior DDG, DoT, J.R. Gupta; Bharti Cellular Ltd, Delhi; Vodafone Essar Ltd, Mumbai; Vodafone Essar Mobile, Delhi and certain unknown officials of DoT and others the Bench told the counsel to wait for the opinion of the Attorney General G.E. Vahanvati. The Bench after hearing senior counsel K.K. Venugopal for the CBI posted the mater for further hearing on November 29.