Half-truths

It is a measure of how seriously Prime Minister Manmohan Singh is viewing the general outrage over the telecom ministry helping Reliance Communications to jump the queue of those waiting for spectrum that Communications Minister A Raja has been forced to write to him, not once but twice in a single day. However, Mr Raja's replies raise more questions than they answer. It is truly amazing that Mr Raja should tell the Prime Minister that his department has decided to continue with the existing policy of "first-come-first-served" for processing the applications of 46 companies who have made 575 applications for spectrum in 22 telecom circles. For what Mr Raja calls the existing policy applies only to giving spectrum to existing operators as and when they get enough new subscribers to become eligible for additional spectrum, and not to applications by newcomers.

The only time the Telecommunications Regulatory Authority of India (Trai) was asked to deal with the question of newcomers was in October 2003, when, ironically, Reliance's gate-crashing into mobile telephony was being legitimised. At that time, Trai had categorically said that auctioning was the only way to go for new mobile licences, as had been done in 2001, when a fourth mobile licensee was allowed for each circle. Equally intriguing is the cut-off date of September 25, 2007, that Mr Raja has told the Prime Minister will be followed "" it is only once the applications received by that date (from 20 companies) have been processed that those received subsequently will be processed. This is strange since it was on September 25 that the newspapers reported Mr Raja's statement that October 1 would be the cut-off date for getting applications "" so why announce a cut-off if the applications received are not even going to be processed?

To set the Prime Minister's mind at rest on the issue of favouring Reliance Communications, Mr Raja has told him the company will get spectrum only after the existing operators who are eligible for more spectrum and the three licensees who haven't got spectrum so far are given their due. The latter include Idea, which has got a licence for two telecom circles but has not been given spectrum, Maxis Aircell for 14 circles, and Vodafone Essar for six. In other words, the minister seeks to say, Reliance Communications has not been favoured out of turn. This is also the point Reliance Communications' chief Anil Ambani makes when he says his firm's spectrum eligibility date is October 17, 2007, the day it paid the licence fee, and not February 2006 as is being portrayed by others.

But what Mr Raja is not telling the Prime Minister is that, since the Telecom Engineering Centre (TEC) has increased the subscriber requirements four-fold, none of the existing firms is going to qualify for more spectrum in a long time. And so Reliance Communications will get spectrum after Idea/Maxis Aircell/Vodafone Essar get theirs, except that Reliance Communications is not even in the list of the other 43 firms that have applied for spectrum! To be sure, two Anil Ambani group firms (Swan and Cheetah) are at No. 3 and No. 4 in most of the 16 telecom circles that they have applied for, and so would have got the spectrum anyway. But under the law on crossholdings in the same telecom circle, the Anil Ambani group cannot hold more than 10 per cent of their equity "" so, getting a partner who would fund a few billion dollars of capital expenditure and yet allow the group with its 10 per cent holding to run the firms would have been next to impossible. Mr Raja has some further explaining to do.