2G Spectrum Scam

What is the spectrum scam?
  •                       To understand the contours of this scam , we need to understand what is spectrum and spectrum allocation
  •                        Spectrum is a collection of different types of electromagnetic radiations of varying wavelengths. To put it simply, these are airwaves operating on different radio frequencies. It is a natural resource like land and like land the availability is limited. Radio frequency does not respect international boundaries. Hence the need to regulate and allocate this scarce resource to actual users.
  •                        In India, these air waves are used for space communication, mobile communication, broadcasting, radio navigation, defense communication etc. The International Telecommunication Union (ITU) at the World Radio Communication Conferences allocates spectrum frequencies for the use of various countries. Spectrum allocation is necessary in order to ensure interference free operation for each radio service. In India, GSM technology works in the frequency bands of 900 and 1800 MHz  and CDMA technology works in the800 MHz.
  •                        In India, initially from around 1995 spectrum was auctioned. From around 2000/01 spectrum was allocated on a fixed rate plus a revenue sharing model But at that period the subscriber base was small—about 36 million which increased to about 75 million in 2004.In 2007 which was the period of the alleged scam , the subscriber base had climbed to almost 500 million.
  •                        The 2G spectrum scam revolves around the fact that in 2007 additional licenses were allotted  at 2001 prices  despite advice to adopt the auction  route by Ministry officials
  •                        Companies with no experience in the telecom business were allotted licenses.-- For Ex.Swan was allocated licenses in 13 circles for Rs1537 crores and Unitech in 22 circles for Rs.1651 crores which they later sold to foreign companies at Rs.9400 / 11620 crores respectively. One of the buying companies is Edisalat which has been in the news lately for the wrong reasons.
  •                         Licenses were allotted on the basis of first come first served basis with no bids.
  •                        The last date was changed from 1/10/07 to 25/9/10. It is alleged that only selected bidders were informed of the change. Related ministries were not informed.
  •                        The total money collected by the government was around Rs.20,000 crores E. Contrast between 2G spectrum allocation in 2007 & 3G spectrum allocation in 2010.
  •                        The issue has become the talk of the town because of the money collected after 3G auction in April 10.
  •                        The total money collected by the government was Rs.1,06,000 lac crores against the budgeted amount of Rs. 35,000 crores.
  •                        Because of the excess collection, the fiscal deficit may come down to 4.5 % in 2010-11 from the projected 5.5 %.
  •                        There are criticisms of the auction route as well. It is feared that because of the high prices the bidders had to pay, the 3G services may become a niche service available only in the Metros and that it will be costly and unaffordable to the common man. Let us wait and see.


Thanks to R Krishnan, T.I.M.E faculty.