India 2G Spectrum Allocation Scam – Fuzzy logic

Now featuring among the world’s list of scams, the India 2G spectrum allocation scam is not all that clear cut a case. While the CAG report must be alright in the irregularities in spectrum allocation, there is a flipside to the story.

First and foremost what is the core issue? Instead of auctioning the spectrum, it was given on a First come first served basis and this allegedly cost the government a whopping sum of Rs 1.76 Trillion. This figure itself has been challenged by several bodies because it is a hypothetical scenario figure and somewhat fictional. But, more importantly what is the net result of selling the spectrum cheap? Have all the Telecom companies in India made a killing of profits out of it? No. Given the intense competition, all this benefit has been passed on to the consumers, slashing mobile charges to such bare minimal levels that people who do not have food to eat have mobile phones today. So, the cheap pricing of the spectrum has gone to the Aam Aadmi (the common man) actually. There is no loss “as such” to the nation.

DOT  has revolutionized communications in India and in A Raja’s tenure cheap 2G technology really helped lower the communication price to the customers (again I mean the Aam Aadmi). So, alright he may have used a method different from auction but it is not the first time in the world such a method is used. There are various alterations of spectrum allocation policies in the world. So, whether or not this is criminal as such is doubtful as A Raja himself has claimed. That his views were not part of the final report is a sort of blasphemy.

Furthermore, there have not been too many takers for the expensive 3G technology – and it has not seen the success that 2G did making mobile an everyday product for the common man. And to put not too fine a point to it, the mobile service companies have low margins and are suffering from cash flow problems due to intense competition and price cutting. So, no telling what the 2G auction may have fetched and if indeed expensive technology would have prevented so many poor people from using mobile phones - and we are talking about daily wage laborers, maids, drivers rickshaw pullers etc etc. who today all use a mobile though some of them can't afford 3 meals a day.

Some small points of the report also don’t cut ice. For instance, one anomaly reported is that FCFS was not strictly followed to allocate to those who first applied but to those who were first eligible. Well, I think there is no point in awarding contract to those not eligible, just because they “first applied”. Duh!

Now coming to part II of the story- because the Government of India decided to follow a FCFS policy and not auction, the licenses issued were cancelled in retrospect! Especially after they had made huge investments and some of these companies’ international partners particularly would have had no idea how the system is supposed to work in India. I think that is a bit unfair to the companies. It was not their decision!!!

I think there is a bit of jumping to conclusions involved in the way this scam has been investigated or reported in the media. Though I’m not denying that they have found some irregularities but the whole scale and intent seems grossly exaggerated and not balanced.