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2G Scam an UPDATE

From the time allegations of misappropriation during the bidding for allocation of 2Gspectrum surfaced, till Telecom Minister A Raja's ouster, high drama charged both politics

in Delhi and Tamil Nadu. So what exactly is the Spectrum Scam that led to all this?

WHAT IS SPECTRUM SCAM?

2G licenses issued to private telecom players at throwaway prices in 2008

CAG: Spectrum scam has cost the government Rs. 1.76 lakh crore

CAG: Rules and procedures flouted while issuing licenses

WHAT ARE THE CHARGES ON FORMER TELECOM MINISTER A RAJA?

CHEAP TELECOM LICENSES

Entry fee for spectrum licenses in 2008 pegged at 2001 prices

Mobile subscriber base had shot up to 350 million in 2008 from 4 million in 2001

NO PROCEDURES FOLLOWED

Rules changed after the game had begun

Cut-off date for applications advanced by a week

Licenses issued on a first-come-first-served basis No proper auction process followed, no bids invited

Raja ignored advice of TRAI, Law Ministry, Finance Ministry

TRAI had recommended auctioning of spectrum at market rates

FAVOURITISM, CORPORATES ENCASH PREMIUM

Unitech, Swan Telecom got licenses without any prior telecom experience

Swan Telecom given license even though it did not meet eligibility criteria Swan got license for Rs. 1537 crore, sold 45% stake to Etisalat for Rs. 4200 crore

Unitech Wireless got license for Rs. 1661 crore, sold 60% stake for Rs. 6200 crore

All nine companies paid DoT only Rs. 10,772 crore for 2G licences

STORY:

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"The entire process of allocation of UAS (Unified Access Service) licences lacked

transparency and was undertaken in an arbitrary, unfair and inequitable manner. The

Hon'ble Prime Minister had stressed on the need for a fair and transparent allocation ofspectrum, and the ministry of finance had sought for the decision regarding spectrum

pricing to be considered by an EGoM. Brushing aside their concerns and advices, DoT , in

2008, proceeded to issue 122 new licenses for 2G spectrum at 2001 prices, by floutingevery canon of financial propriety, rules and procedures,"

In November 2007, PM Manmohan Singh wrote to Raja expressing concern that given

inadequate spectrum and the unprecedented number of applications received from fresh

licenses, an auction process be followed. Raja replied saying that the auction of spectrumwas considered by both TRAI and Telecom Commission and that his ministry has come to

a conclusion that an auction "will be unfair, discriminator and capricious" as it would

distort the level-playing field for new entrants.

The finance ministry questioned the "sanctity of continuing with a price determined way

back in 2001 without any indexation or current valuation and sought review of the matter."DoT member (finance) agreed with the finance ministry, and sought an "in-depth analysis

of the issue prior to taking any further action." To this Raja audaciously wrote: "Thesetypes of continuous confusions observed on the file whoever be the officer concerned do

not show any legitimacy and integrity but only their vested interest."

As a matter of fact, DoT did not follow "its own guidelines on eligibility conditions

arbitrarily changed the cut-off date for receipt of applications post facto and altered theconditions of the FCFS (first-come first-serve) procedure at crucial junctures without valid

and cogent reasons, which gave unfair advantage to certain companies,"