The integrity of the process always determines the quality of the product that comes out of it. If a process is wrong, the product seldom turns out right. It is now a common conclusion that the procedure for the allocation of spectrum in 2007-08 for the second generation (2G) telecom services was flawed, and grossly so. When there were many more aspirants for the licences than there was frequency spectrum, and an auction should have been the obvious method to decide on the winners, the licences were handed out instead in a non-transparent, first-come-first-served basis and at a low price set seven years earlier. These are the charges that the former Union Minister for Telecommunications, A. Raja, faces, and the ones that forced his resignation. The Comptroller and Auditor General of India found that some of the licence winners had not met even the basic requirements when they applied. It comes as little surprise therefore that the Telecom Regulatory Authority of India (TRAI) is advising the government to cancel the licences of all the six companies for not conforming to the licence conditions. The relevant requirement was simple: within 12 months of getting the licence, mobile phone operators must make their cellular signals, and therefore the service, available in at least 10 per cent of each district headquarters in each telecom circle. Spectrum being scarce, this was necessary to ensure that licencees did not take the spectrum and not provide the requisite telephone service to the community. Remarkably, none of the six licencees has managed to roll out service as stipulated; some indeed have barely started operations. The 2G fiasco is thus strikingly complete.
The Manmohan Singh government has no option but to take serious note of the glaring non-performance by these companies. Perhaps it was inevitable they would fail, because as the CAG discovered, many of these companies did not have any experience in telecommunications. Revoking their licences would therefore be a rational and appropriate response. The case of one or two of the licencees who exerted themselves enough to accumulate a few million subscribers may be tricky, but even that is not beyond resolution. The spectrum that will be wrested back must be quickly put through as transparent an auction as defined the allotment of the third generation spectrum earlier this year. It requires no genius to predict that the government's take from the sale will be substantially larger than the Rs.12,386 crore it got in 2007-08. There will be nothing to fear for customers of the scratched companies; if the government were to facilitate number portability as promised, they can painlessly switch themselves to another service provider.
