2G:SC pulls up TRAI for "lopsided" approach in recommendations

The Supreme Court on Thursday pulled up the Telecom Regulatory Authority of India (TRAI) for adopting a "lopsided" approach in recommending grant of 2G spectrum at 2001 prices and methodology which suffered from several deficiencies.

"To say the least, the entire approach adopted by TRAI was lopsided and contrary to the decision taken by the Council of Ministers and its recommendations became a handle for the the then Minister of C&IT A Raja and the officers of the DoT who virtually gifted away the important national asset at throw-away prices," a bench of justices G S Singhvi and A K Ganguly said.

The bench, which quashed the 122 2G spectrum licences granted during Raja's tenure as Telecom Minister, said the DoT and the Ministry of Finance were required to discuss and finalise the spectrum pricing formula as per the decision of the Council of Ministers in 2003.

"Recommendations dated August 28, 2007, show that as per TRAI's own assessment, the existing system of spectrum allocation criteria, pricing methodology and the management system suffered from a number of deficiencies and there was an urgent need to address the issues linked with spectrum efficiency and its management and yet it decided to recommend the allocation of spectrum at the price determined in 2001," it said.

TRAI itself had recognised in its recommendations that spectrum was a scarce commodity but it preferred to recommend allocation of 2G spectrum on the basis of 2001 price by invoking the "theory of level-playing field", the bench said.

"All this was done in the name of growth, affordability, penetration of wireless services in semi-urban and rural areas, etc.  Unfortunately, while doing so, TRAI completely overlooked that one of the main objectives of New Telecom Policy (NTP) 1999 was that spectrum should be utilised efficiently, economically, rationally and optimally and there should be a transparent process of allocation of frequency spectrum," the bench said.

The bench noted that due the the low pricing of spectrum the telecom companies made huge profits by off-loading their stakes to foreign firms, in the name of transfer of equity or infusion of fresh capital by foreign companies soon after obtaining the licences.

"We have no doubt that if the method of auction had been adopted for grant of licence which could be the only rational and transparent method for distribution of national wealth, the nation would have been enriched by many thousand crores," the bench said.