Delhi HC raps DoT’s spectrum allocation policy

The Delhi High Court has slammed the Department of Telecom (DoT) for its flawed policy of allocating spectrum (air waves on which wireless communication is provided) on a first-come, first-served basis.

"It is like selling cinema tickets," observed a division bench comprising Justice Mukul Mudgal and Justice Valmiki Mehta.

The DoT counsel countered court's remarks saying that the entire process of the allocation was ''transparent''.

Reacting to this statement, the Bench said, ''We will see how transparent it really was... we will sure find this out.''

The Bench further asked the department counsel how much spectrum the government has alloted and how much was remaining with it, for which the DoT didn't have a specific answer..

''We find it very strange that public exchequer and valuable resources have been involved and misused in this way. ... We are completely astounded," the judges remarked.

Court was hearing a public interest litigation (PIL) filed by an economist, Arvind Gupta, who has challenged spectrum issue policy of the government and alleged that DoT alloted it at much below than the market prices to the new operators.

Gupta said that these violations were apparent in the case of Swan Telecom and six subsidiaries owned by real estate major Unitech. Some of them later sold the alloted spectrum at much higher prices.

According to Gupta, Swan Telecom is a firm jointly promoted by Reliance Telecom (an arm of Anil Ambani's ADA group firm RCom), and Tiger Trustees, also promoted by the same group.

 Gupta filed his PIL after Unitech is alleged to have sold a big stake in a start-up telecom subsidiary to Norwegian telecom group Telenor ASA for Rs6120 crore, essentially flipping a lucrative spectrum licence it had obtained from the government for Rs1651 crore.

Consenting to his allegations, the bench said, "prima facie we find that spectrum has been allocated in a worst manner and public exchequers have lost thousands of crores (rupees)".

The court referred the matter to another bench headed by the Delhi High Court chief justice A P Shah and directed it to be listed on July 8.

D Raja, who just began his second term in the ministry, has been in the eye of storm for allocating spectrum on first-come, first-served basis, even as he has claimed that he was only following the policies of his predecessors.

In a December 2008 hearing, the centre had defended its first-come-first-serve policy, saying that open bidding was not beneficial for consumers, who would have to ultimately bear the brunt for its high bidding price.

''If the spectrum was to be auctioned to the highest bidder for an upfront payment, such a bidder would pass on the cost to the customer or would go bankrupt. The cost of running the services can become so high that nobody would really be interested in applying for the licence,'' the government said in its affidavit filed in the Delhi High Court in December.

Rajya Sabha member Abani Roy of RSP had also written to prime minister Manmohan Singh demanding a probe into the allotment of additional spectrum to GSM service operators.

At that time  Siddhartha Behura, secretary of DoT and chairman of Telecom Commissionsaid that ''all additional spectrum allotment was done as per the guidelines.

''We have also approved the one-time spectrum acquisition fee and have hiked fees by 1-2 per cent of mobile operators' revenue for using additional airwaves,'' he said.

Roy alleged in his letter that the allotment of spectrum beyond 6.2 Mhz to GSM players like Airtel, Vodafone and Idea has cost the exchequer Rs40,000 crore.
A Delhi-based NGO, Telecom Watchdog, also recently filed a petition to the Delhi High Court on the issue of allocation of excess spectrum to incumbent telecom operators.

The NGO asked for an increase in the charges for spectrum allocated in excess of the contracted amount, and urged the court to direct DoT to allocate additional spectrum based on subscriber figures.