2g spectrum scam 2012
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2G
SPECTRUM
SCAM
www.time4education.com
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IN 2011,
TIME MAGAZINE LISTED
2G SPECTRUM SCAM AS
NUMBER TWO ON THEIR
ALL-TIME LIST OFTOP 10 ABUSES OF
POWER..!
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STRUCTURE
MOBILE GENERATIONS 1G, 2G, ETC. SPECTRUM
SPECTRUM MANAGEMENT IN INDIA
2G SCAM TIMELINE AFFECTED PARTIES CORPORATES,
POLITICIANS, BUREAUCRATS
CAG REPORT SUPREME COURT JUDGEMENT
REACTIONS
WAY FORWARD
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MOBILE GENERATIONS
Standards set by The InternationalTelecommunications Union (ITU), part of the UNO
1G 1980s; analog signals; used mainly for voice
calls; poor sound quality; low transfer speed
2G 1990s di ital si nals GSM standard SMS
introduced; GPRS also introduced; much better
data transfer rates
3G 2000s; very high data transfer rates; videocalls, video conferencing, mobile TV, online
gaming, etc.
4G Crazy data transfer rates!!!
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SPECTRUM
Spectrum refers to the radio frequencies/ air waves; apart of the electromagnetic spectrum
Different parts of the spectrum used for different
technologies/ applications
AM/FM Radio, TV broadcasts, mobile communications,w , ,
maritime communication, etc.
A limited natural resource; hence, government
regulated and then, sold/ licensed to privateoperators
Unlike other natural resources, spectrum is not
consumed upon its usage; liable to be wasted if not
used efficiently
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FREQUENCY BANDS ALLOCATED
FOR DIFFERENT SERVICES
S.No. Radio service Frequency band
1 Radio navigation 9 14 KHz
2 Broadcasting 500 1600 KHz
3 Maritime mobile 2000 2200 KHz
4 Mobile phones 610 810 MHz; 890 960
MHz; 1710 1930 MHz
5 FM 85 110 MHz
6 Bluetooth 2400 2480 MHz
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Spectrum and Mobile
telephone services in India GSM technology works in frequency bands of 900 and
1800 MHz; CDMA technology works in 800 MHz band
Min. spectrum required for launching
GSM services: 4.4 MHz services: . z
Essential to allocate spectrum in common bands which are
being used the world over
Indias mobile subscribers base ~ 900 million Scarce spectrum + poor quality services (call drops, etc.)
Too many operators in a single area
Limited availability of spectrum for commercial use
Lack of coherence in govt. policies spectrum allocation
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SPECTRUM MANAGEMENT
Wireless Planning and Coordination (WPC) wing ofthe Ministry of Communications responsible for
Spectrum management in India
National Frequency Allocation Plan basis of
development and manufacturing of wireless equipment
TRAI Telecom Regulatory Authority of India
Independent regulator
Mission: to have conditions that encourage growth oftelecommunications sector in India
Ensure fair, transparent policy environment
India is divided into 22 telecom zones and there are a
total 281 zonal licenses in the market
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2G SPECTRUM SCAM
1. May 18, 2007 A. Raja takes over as the Ministerfor Communications and Information Technology
2. Process of allotment of 2G spectrum along with
Universal Access Service (UAS) licenses initiated by
the Dept. of Telecom (DoT). v
of 2G spectrum to DoT; ignored by A. Raja
4. Sept 25, 2007 Telecom ministry issues Press note,
fixing deadline for applications as Oct 1, 20075. Oct 1, 2007 DoT receives 575 applications for UAS
licenses by 46 companies
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2G SPECTRUM SCAM6. Nov 2, 2007 PM writes to Raja directing him to
ensure that spectrum is allocated in a fair/ transparent
manner; Raja writes back allegedly rejecting many of
his recommendations
7. Nov 22, 2007 Ministry of Finance writes to DoT
raising concerns over the procedures adopted;demand for review rejected
8. Jan 10, 2008 DoT decides to issue licenses on first-
come-first-serve basis; prepones the cut-off date to
Sep 25 07 from Oct 1 07; company representativescalled between 3.30 pm and 4.30 pm, and issued
letters of intent; Pan-India license fee fixed at 2001
rate of Rs. 1658 crore;
Govt. richer by Rs. 12,386 crore in one day!
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2G SPECTRUM SCAM
9. Nov 2008 Swan Telecom got license for Rs. 1537crore and sold 45% stake to Etisalat for Rs. 4200
crore; Unitech wireless got license for Rs. 1661 crore
and sold 60% stake for Rs. 6200 crore; Tata
Teleservices sold 26% stake to DoCoMo for Rs. 13070
crore
10. May 4, 2009 Detailed complaint made by NGO
Telecom Watchdog to the Central Vigilance Commission
(CVC) on spectrum allocation to Loop telecom
11. May 19, 2009 Another complaint by Arun Agarwal,highlighting spectrum to Swan Telecom at throwaway
prices
12. 2009 CVC directs CBI to probe allocation of 2G
spectrum
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2G SPECTRUM SCAM
13. Oct 21, 2009 CBI registers FIR against unnamed DoTofficials and private firms for criminal conspiracy and
loss to exchequer
14. Nov 16, 2009 CBI seeks details of tapped
conversation of corporate lobbyist Niira Radia to find
out involvement of middle men in spectrum allocation
15. March 31, 2010 Comptroller and Auditor General
(CAG) says there were large scale irregularities in
spectrum allocation
16. May 6, 2010 Telephone conversations between Rajaand Radia made public by the media
17. Sep 13, 2010 SC asks Centre, Raja to reply in 10
days to 3 petitions of CPIL on allegation that there was
a Rs. 70,000 crore scam
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2G SPECTRUM SCAM
18. Nov 10, 2010 CAG submits report; claims that thescam caused a loss of Rs. 1.76 lakh crore(!!!)
19. Nov 14, 2010 Raja resigns as Telecom minister
20. Nov 15, 2010 Kapil Sibal takes over Telecom Min.
21. Nov 20, 2010 Affidavit on behalf of PM filed in SC;
22. Dec 2, 2010 - SC comes down heavily on Raja for
bypassing and overruling PMs advice to defer
allocation of 2G spectrum by a few days23. Dec 8, 2010 - SC favours including in the probe period
since 2001 when first-come-first-serve was the norm for
spectrum allocation
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2G SPECTRUM SCAM
24. Jan 4, 2011 Subramanian Swamy moves SC seekingcancellation of 2G spectrum licenses
25. Feb 2, 2011 Raja, Siddharth Behura and RK
Chandolia arrested and remanded in CBI custody
26. Feb 17, 2011 Raja sent to Tihar Jail. ,
Finance minister, P Chidambaram as witnesses
28. Feb 2, 2012 SC cancels all 122 licenses allotted
during Rajas tenure29. Feb 4, 2012 Special court dismisses Swamys plea to
make Chidambaram as co-accused in the 2G scam
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SCAM LIST OF COMPANIES
1. Unitech Wireless (Uninor) 22 licenses
2. Datacom Solutions (Videocon) 21 licenses
3. Loop Telecom 21 licenses
4. Sistema Shyam (MTS India) 21 licenses
5. Swan Telecom (Etisalat DB Telecom) 15 licenses
6. Idea cellular 13 licenses
7. S Tel 6 licenses8. Tata Teleservices 3 licenses
JUDGEMENT DIRECTLY IMPACTS 60+ MILLION MOBILE
PHONE USERS; MOBILE NUMBER PORTABILITY AN OPTION
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2G Scam Affected Parties
Andimuthu Raja
DMK; 4-times MP
CBI, ED allege he could have received Rs. 3000 cr. as
bribe for bringing forward the cut-off daten un n w n m n ur u n
Seychelles to channelize the kickbacks he received
Waywardly redefined the first-come-first-serve policy
Didnt auction or adopt some other market-determinedmethodology
In Tihar jail for more than one year now; applied for bail
several times but every time, got rejected
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2G Scam Affected Parties
M K Kanimozhi
DMK; Daughter of Tamil Nadu CM, Karunanidhi
Owns 20% stake in Kalaignar TV; step-mother owns
60% in the same channel or e w t aja to get a a wa, promoter o
Swan Telecom, to circuitously route Rs. 200 cr. to
Kalaignar TV
Taken in custody in May 11; granted bail in Nov 11
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2G Scam Affected Parties
Siddharth Behura
Telecom secretary, when licenses were granted
Behura conspired with Raja and others accused
Allegedly shut counters to physically block other telecomm n
RK Chandolia
Rajas private secretary, when licenses were granted Conspired with Raja and other accused
Allegedly shut counters to physically block other telecom
companies
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2G Scam Affected Parties
Corporate Executives accused
Sanjay Chandra MD, Unitech Wireless
Gautam Doshi, Hari Nair, Surendra Pipara
Reliance ADAG Vinod Goenka, Shahid Balwa, Asif Balwa Swan
Telecom
Ravi Ruia, Anshuman Ruia Essar group
IP Khaitan, Kiran Khaitan Loop Telecom
Sharath Kumar Kalaignar TV
Karim Morani Cineyug Films
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2G Scam Affected Parties
Subramanian Swamy
Politican, Academic, Economist; President Janata Party
In Nov 08, wrote a letter to PM seeking permission to
prosecute Raja in regards to 2G spectrum scam ,
asked CBI to investigate and report on the matter
Filed various documents in court to prosecute Chidambaram
Filed a petition against PMO in the SC; argues that PMO
took too long (inaction) in replying to his plea to prosecute
Raja in the scam
SC accepted his petition, saying that all public authorities
should take the decision within 3 months against any public
official, if a request is made
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CAG REPORT ON 2G SCAM
Findings
Telecom commission, Finance Ministry, Law Ministry,
Prime Minister all suggestions/views ignored
Arbitrary changes in the cut-off date
FCFS policy not followed
Issue of licenses to ineligible applicants
Any loss ascertained while attempting to value the2G spectrum can only be presumptive; we have
looked at various indicators to assess a possible
value from the records made available to audit
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CAG REPORT ON 2G SCAM
Findings
1. In Nov 07, S Tel offered to pay a much higher price;
at those prices, value of licenses is approx. Rs.
65,000 cr.. v
prices, value of licenses is approx. Rs. 1,52,000 cr.
3. New licensees of 2008 have attracted substantial
FDI; by this estimate, value of all licenses is betweenRs. 58,000 cr. and Rs. 68,000 cr.
Additional spectrum allotted to existing players; value
of such spectrum may be upto Rs. 37,000 cr.
HENCE, LOSS OF RS. 1,76,000 CRORES!
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Sibals Arithmetic Government has not made up its mind on the charge for
spectrum beyond 6.2 MHz, therefore, loss of Rs.36,993 cr.needs to be excluded as of now
The remaining loss of Rs.1,39,652 cr. is only Rs.99,000 cr.since government has only given 4.4MHz spectrum, while
CAG has wrongly calculated loss based on 6.2 MHz nce t e auct ons were e n , ut censes
were given in 2008, the time value of loss of spectrum isnot Rs.99,000 cr. but Rs. 56,000 cr.
Since spectrum was given late and not in 2008, license
term is 19, not 20 years, loss is down to Rs. 53,000 cr. Since 3G spectrum is three times more efficient than 2G,
the loss is further down to Rs.17,755 cr.
Since 4.4MHz is free with UAL license anyway, the actualloss is zero
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SUPREME COURT JUDGEMENT
By Justice AK Ganguly and GS Singhvi
Cancelled all 122 licenses granted during Rajas
tenure; allocation described as unconstitutional and
arbitrary mpose ne o s. cr. eac on n ec re ess,
Swan Telecom and Tata Teleservices; Rs. 50 lakh on
Loop Telecom, S Tel, Sistema Shyam
Govt./TRAI to decide fresh norms for issuing licenses A Raja wanted to favor some companies at the cost
of the exchequer
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REACTIONS SC JUDGEMENT
CORPORATES
Telenor, Sistema asserted they would take legal
measures to protect their investments
Norway wants to take up 2G issue at Govt. level e enor to separate rom n tec ; see s new partner
Telenor seeking compensation from Unitech for damages
caused to their mobile venture
Russia also mounting pressure on the Govt. to protectforeign investors
Tata Teleservices to file review petition on SC order
Batelco, Bahrain telecom company, holding 43% stake in
S Tel, selling its entire stake to Siva group
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WAY FORWARD
Sibal All future licenses to be auctioned;
licenses not to be linked with spectrum
allocation; uniform license fee (8%)
, , , ,
Videocon demand two-stage auctions
Open access to spectrum to all eligible users
against a usage charge, which can beadjusted later
TELECOM WARS TO CONTINUE!!!
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Thanks!
www.time4education.com
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