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Updated: May 22, 2010 19:06 IST

‘I am no friend of any operator’

R. K. Radhakrishnan
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A. Raja: “The irony is that the person who took the decision to price the spectrum that was allocated beyond 6.2 MHz is being accused of giving it away for a song!” Photo : R. Ragu
A. Raja: “The irony is that the person who took the decision to price the spectrum that was allocated beyond 6.2 MHz is being accused of giving it away for a song!” Photo : R. Ragu

A. Raja defends his Ministry's actions and wards off charges that 2G spectrum auctions caused losses to the exchequer.

Union Communications and Information Technology Minister A. Raja says he has achieved what he had wanted to achieve as a Minister: herald a telecommunications revolution in the country. In an interview to The Hindu in New Delhi on Friday, he defends the decisions his Ministry took on 2G spectrum allocation, expresses his confidence about bringing call rates down to 10 paise a minute, and outlines plans to reinvigorate BSNL and MTNL.

Soon after you were appointed Communications and Information Technology Minister, you said you would herald a telecom and technology revolution in the country. How have you fared so far?

In 2007, when I took over this Ministry, on an average 75 lakh telephone connections were being added each month. In 2009 this increased to 1.2 crore connections a month.

After I came back as Telecom Minister [in UPA-II], the number rose to two crore a month. You should remember that the government's target was to provide 60 crore connections by 2012. We achieved this in March 2010 itself.

In a span of just one year, tele-density has leaped from 39 per cent in 2009 to 53 per cent now. Phone tariffs in India are among the lowest in the world because of the policies of my Ministry. When prices of all other commodities are increasing, only telephone call rates are coming down. I told you in 2007 that I will get STD call rates down to 25 paise. This has been achieved. I assure you that local call rates will soon be reduced further to 10 paise. This is nothing short of a miracle.

You've also seen the 3G auction. I told you two years ago that we will get in excess of Rs.40,000 crore. The auction exceeded our expectations and is an indication of the phenomenal growth that will take place in the coming decade.

Through the postal department, we have introduced India's largest micro life insurance policy. The department is more focused on its core competence and is taking on competition through a process of skill development, computerisation, and innovative products.

In IT, the biggest achievement has been setting up the national knowledge network that connects all universities, libraries, hospitals and agricultural institutions. The massive expansion of the national e-governance programme has been a boon to remote and far-flung villages. I can go on listing…

But the Opposition is not impressed. The BJP and the CPI(M) want you out of office because they say your policies on 2G spectrum led to serious losses to the exchequer. They are basing this on the 3G auction prices…

Let me explain chronologically. The National Telecom Policy 1999 was framed by the NDA government. It laid down that the 2G spectrum has to be allotted on revenue share basis since the 1994 policy [of auctioning] failed miserably. The operators who bought the spectrum and the licences at that time went to court on the grounds that they were unable to pay and sought a direction to government to bail them out. The court directed the government to consider. In 1999, the government devised a policy that favoured the revenue route over that of the auction route.

Policy-wise, 2G is connected to the common man because it is a basic service meant for public health purposes, education and a valuable tool for improvement of rural economy. 3G is for the business community and for entertainment.

From the point of revenue, let me first assert that there is no loss. One section of the media and some vested interests in the [telecom] industry are wilfully and wantonly suppressing the fact that we have made over Rs.70,000 crore as revenue from 2G because we adopted the revenue route. As the subscriber base grows each year, we'll make upwards of Rs.15,000 crore every year.

The other question is this: If 3G auction issue went to EGoM [Empowered Group of Ministers], why not 2G. On the face of it, this question seems legitimate. But you have to remember that only when there is a difference of opinion between two Ministries, does this happen. In this case, I referred the issue to the Prime Minister and requested him to constitute an EGoM because there was a difference of opinion on fixing the base price for 3G.

In the case of 2G there was no such issue. The “no cap” policy [number of operators per circle] was endorsed by the Telecom Commission in which Ministries of Finance and Industry are represented. It also has a Planning Commission member. Since there was no deviation from the existing policy, and since the recommendations of TRAI were approved by the Commission, there was no reason to refer it to the Prime Minister to constitute an EGoM.

With due respect to the leaders of the Opposition parties, the comparison between 2G and 3G is odious and irrational.

But TRAI had recommended that the 3G auction price should be applied for 2G spectrum too. Will the Department of Telecommunications and your Ministry accept this recommendation?

TRAI, in its latest report, has reiterated that the starting spectrum for an operator [up to 6.2 megahertz] should not be auctioned. The question of pricing and rental beyond 6.2 MHz is what is being considered by TRAI. Right now, TRAI is having further discussions on this issue based on the efficiency and scarcity value of 3G. Once TRAI makes a recommendation we will take a decision after discussions in the Telecom Commission. I've allocated only 4.4 MHz each to operators.

Is there a reluctance to price 2G spectrum beyond 6.2 MHz because all those who hold the spectrum are very big operators?

You should remember that there is no contractual obligation on the part of the government to give additional spectrum to any operator beyond 6.2 MHz. I'm the first Minister who raised the question as to why we should give spectrum free to any operator. I referred the matter to TRAI, and in my communication I told them that we have to charge up front for allocation over 6.2 MHz. The irony is that the person who took the decision to price the spectrum that was allocated beyond 6.2 MHz is being accused of giving it away for a song!

I'm no friend of any operator. Some people might have been annoyed that a cartel was being broken and some others might have been irritated that their monopoly for about a quarter of a century was being taken away. This is a natural commercial instinct. I must face the consequences. The Prime Minister knows this very well. Had I not done this, I would not have faced any problem. When this was raised in Parliament, I said, “I don't want to be a stagnant, stinking pool…Only flowing water generates current.” Not only that. I've recorded in Parliament that I'm the only Minister of this Department to have displayed the available spectrum bandwidth details on the website. This might have caused certain setbacks commercially to some in the industry. I'm being targeted for that reason too.

The CBI, the CVC and even the CAG are investigating the 2G spectrum allocation. You say you followed existing policy. Then why is every investigating agency at your door step?

No Minister is beyond scrutiny. Simply because your blood has been offered to a lab, voluntarily or involuntarily, no one can conclude that you have a chronic disease with stigma.

Again let me explain. There are four issues: One, is it fair to issue and allocate spectrum bandwidth in 2008 at the same licence fee of Rs.1,650 crore determined in 2001? Two, is it the right policy to have adopted ‘first-come first-served' basis? Three, why did you not auction 2G spectrum bandwidth allocation? And, four, does it not cause loss of revenue to the government as these firms that got the licence and the spectrum sold their shares at a higher price? I have repeatedly replied to these questions inside and outside Parliament.

The amount of Rs.1,650 crore was determined by TRAI as licence fee in 2001, and new licences were issued at the same price even 40 days prior to my taking charge of this Ministry. This was because TRAI did not give any new recommendations after 2001. But it continued to enhance the share in the adjusted gross revenue every year. Due to this, an annual revenue of about Rs.15,000 crore was accruing to the government.

The second criticism is about our following the ‘first-come-first served' policy. In 1999, the Cabinet decided not to auction spectrum bandwidth and preferred revenue-sharing method. Since then, right through the tenure of Pramod Mahajan, Arun Shourie, till the tenure of Dayanidhi Maran, this policy continued.

There's no other option when there is no scope for auction. Hence, the same method was adopted during my tenure also. I've recorded this in Parliament in the presence of Arun Shourie. No one has denied this and no one can dispute it.

The third criticism is about non-auctioning of spectrum bandwidth. In 2007, the Telecom Commission accepted the recommendations of TRAI, which stated that it is not fair to go for auctioning to maintain a level playing-field as we have allocated spectrum without auction to the existing operators from 1999. The government too accepted and implemented it.

The fourth criticism is about the disposal of shares by the new firms that got the allotment. Normally, the Finance Ministry monitors such matters and takes an effort to establish whether it is right or wrong. After scrutiny of both Swan and Unitech at the hands of the Finance Ministry, the Cabinet Committee has approved its finding that these firms have not sold their shares but only diluted the shares to get FDI to raise towers and other infrastructure, well within the legal framework for promoting their business. Neither my Department nor I have any role in it. When this issue was raised for the first time, I discussed this with the Prime Minister and the then Finance Minister, P. Chidambaram. The Finance Ministry is also of the firm view that shares have not been sold. Even after deliberating several times, the criticism against it is continuing. Is it out of ignorance or annoyance, or [is it a] systematic, politically motivated, disinformation campaign? It's for anyone to infer.

You've been promising number portability and the deadlines seem to be shifting every time. When will we have number portability?

Number portability is getting delayed because of problems in the import of equipment, and national security concerns. I'm continuously monitoring the situation. I'm confident that we'll have number portability by July.

BSNL and MTNL have been on the wane for a few years now. The Ministry does not appear to have done much to arrest the slide…

It's a fact that BSNL's revenues are down. This is because of the intense competition, our delayed reaction time, endless litigation, the implications of the Sixth Pay Commission and huge delays in our tendering process. We're simply not able to react and move ahead.

Add to this our social obligations. We're the only ones that service the remotest of corners of our country. No private company of comparable size has the staff strength that we have. They do not have the social obligation we have when it comes to employment. We also have to service a huge number of landlines across the country and most of these are in places which have no other form of communication.

It is to promote BSNL and MTNL that I pushed to give them 3G spectrum ahead of everyone else. We've also given them WiMax ahead of the others. We're constantly exploring avenues so that BSNL and MTNL can turn the corner.



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