Indian telecom industry has undergone a revolutionary change during the past few years to become one of the leading telecom markets on the global map But its ministry always has scandals to talk about.
Former telecom minister Sukh Ram was proven guilty in a Rs 1.68 crore scam which involved a telecom equipment contract being awarded to a private firm.
Pramod Mahajan was alleged to have improperly favoured Reliance Infocomm. Ram Vilas Paswan has been accused of a Rs 130 billion-scam in issuing licences for telecom services. And the latest scam, involving ex minister A Raja’s decision of granting 2G licenses.
In his defense, A Raja is saying that he followed national telecom policy and what his predecessors did in offering licences during their tenure. So, what exactly have his predecessors done? Here is a look at that.
Sukh Ram (1991-1996)
He was accused of being involved in a scandal worth Rs 1,500 crore, although the minister is also credited with unleashing the communications revolution in the country. When he took over, 40 lakh people were on the BSNL waiting list with the wait stretching from one to ten years. Sukh Ram ended the wait by inviting MNCs to introduce the latest technology in the country, and thus brought mobile telephony to India.
However, he was charged with amassing disproportionate assets during his tenure and was convicted and sentenced to three years' imprisonment for amassing assets worth of Rs 4.25 crore.
He was also accused of taking money in awarding contracts for telecom equipment worth more than Rs 20,000 crore.
It was under him that the National Telecom Policy of 1994 was formulated, which envisaged the bidding process to sell spectrum, and licenses, to operate telephony services.
However, the bill was controversial as it effectively blocked out the participation of Indian companies in the basic telephones tender by declaring that only firms which had the experience of laying down one lakh lines could apply.
Crucially, not all Indian companies were kept out by the bill. Those which had foreign partners with 49 per cent equity were deemed eligible. Even subsidiaries of foreign companies with 10 per cent equity could bid, a further rider added.
Significantly, no Indian public sector company was allowed to bid. This led to much criticism, and the government had to declare on May 27, 1995 that PSUs could apply with equity participation from the private sector.
Sixteen companies submitted their tenders for 21 telecom circles. The highest bidder was Himachal Futuristic Communications Ltd (HFCL) along with Israeli company Bezeq and a Thai company called Shinawatra. They bid Rs 85,000 crore for license to operate in nine circles. This was about five times higher than what the Tatas, Ambanis, the RPG group and other players had to offer.
The government had put no cap on the number of circles one company could bid for, and the mindboggling amount of Rs 85,925 crore for nine telecom circles for basic services was offered by HFCL, which took the entire business community by surprise. Soon, there was talk of a deal between the company and the telecom minister.
It is alleged that as part of this deal, Sukh Ram imposed a cap of three circles for providing cellular and basic services in category A and B circles. And in case of basic services, the highest bidder would be allowed to choose the three circles it wanted to operate in.
At that time lot of companies and their foreign telecommunications partners participated in bidding for the right to offer basic (wire line) telephony in India.
Companies that bid included multinationals like AT&T, US West, Bell Atlantic, Nynex , NTT and Bell Canada, and small telcos such as Bezeq of Israel, and Shinawatra of Thailand. Their Indian partners included Tatas, the Birlas, RPG, Reliance, BPL, Essar, Shyam Telecom and Himachal Futuristic Communications Limited (HFCL).
The privatisation process, however, got stalled and it was only after the next government took over that the bidding process was completed and private players started services in 1996.
Beni Prasad Verma (1996-1998)It was under Verma that the bidding process was completed. TRAI was also formulated during his tenure.
During Verma’s tenure Bell Canada and Swisscom had withdrawn from the Indian market, and American companies such as AT&T and US West had frozen fresh investments blaming “unfriendly telecom policies”, particularly high licence fee outflows and the lack of a powerful regulator.
Moreover, many south East Asian telecom operators also pulled out after 1996 in the aftermath of the South East Asian currency crisis, which reduced their ability to invest in other countries.
Verma during his tenure also handed out additional spectrum of 1.8 MHz to the cellular operators in various circles without any upfront payment.
As a result, the exchequer got only the licence fee share, but some operators delayed the launch and the government lost revenues because of this.
Jagmohan (1998-1999)In 1999 when Jagmohan took over the reins of the ministry, telcos owed Rs 3,500 crore as licence fee. The cellular telephone industry was posting losses worth $92 million every.
Month, but Jagmohan was not willing to relent on his demand that telcos should pay the dues.
He was soon transferred to the Urban Development ministry. The portfolio was taken over by the prime minister A B Vajpaee.
Ram Vilas Paswan(1999-2001)Vajpaee appointed Ram Vilas Paswan as his minister of state. To help the industry come out of trouble,they together oversaw the formulation of the New Telecom Policy of 1999. The earlier practice of a fixed licence fee was replaced by a revenue sharing agreement.
Reliance Infocomm was allowed to offer full nationwide mobility. Paswan was alleged to have been involved in a Rs 1,300 crore scam in giving out licenses to GSM and CDMA players.
While territories were sold out to respective licencees through cellular service providers with the allotment of a frequency of 6.2 MHz realising Rs 742 billion, the same government provided basic service support through CDMA WLL technology at a higher frequency of 12.5 Mhz.
Pramod Mahajan (2001-2003)Pramod Mahajan succeeded to the post in August 2001 under controversial circumstances. He was tasked with implementing NTP 1999. Explosive growth in the mobile subscriber base was triggered in his time. Telecom companies saved thousands of crores of rupees in waived fees.
Mahajan was removed from telecom ministry after the controversies over privatisation of Videsh Sanchar Nigam Limited (VSNL). According to rumours, he managed to amass an estimated Rs 2,500 crores as his share of the spoils. He also allegedly dolled out undue favoures to Reliance Communications.
Arun Shorie (2003-2005)He approved the grant of united access service licences on a first come, first served basis. Shorie pointed to the telecom regulator’s recommendation and Paswan’s policy. He too was accused of devouring certain players.
Dayanidhi Maran (2005-2007)He was the one minister who did not court many controversies. He was liked both by the industry as well as by consumers. He helped to lower the call rates to rock bottom. He was also working towards reducing duty rates for the industry as well as making spectrum available by asking the defence to vacate spectrum. However, he had to exit because his party’s wishes.
A Raja (2007-2010)Raja gave out licences to new operators in 2008 at a rate fixed in 2001. Under him, DoT gave licences without the Cabinet approving the first come first served condition. It is alleged that the cut-off date for applying was revised from October 1 to September 25 to favour certain players.
Some of the allegations against A RajaHe is accused of favouring real estate companies such as Swan and Unitech. Swan got a licence for Rs 1,537 crore and within weeks offloaded 45 per cent of its shares to UAE-based Etisalat for Rs 4,500 crore
Unitech got a licence for Rs 1,650 crore and also offloaded 60 per cent stake to Norwegian company Telenor for Rs 6,200 crore. As Telenor is operating in Pakistan and Bangaldesh, the Home Ministry raised objections.
Raja had also ordered BSNL to enter an unprecedented Intra-Circle Roaming Agreement with Swan. This was done just a few days before the Etisalat deal. This deal with BSNL helped Swan boost its share price.
It is alleged that the move by Raja caused a loss of more than 160,000 crore to the state exchequer.
Kapil Sibal (2010-onward)Sibal has been given the charge of the ministry after A Raja tendered his resignation.
