)
The JPC, in its draft report, said the NDA government in 1999 had to forgo revenue of Rs0 crore in the course of offering a migration package for incumbent telcos to a revenue-share model. The approval and implementation was done when it was a caretaker government.
The decision was, however, defended by the then government, which said it was taken well before the dissolution of the Parliament, though then President K R Narayanan brought this to the attention of the prime minister. Narayanan had said the decisions should be operationalised only after a new government was sworn in, after elections.
The revenue forgone also included Rs 1,444 crore on account of the decision of the government to give an extension of the effective date of licence by six months. The Department of Telecommunications (DoT) also stated the migration package did not provide for recovery of the amount. According to the package, the telecom licensees were to pay a one-time entry fee and licence fee as a percentage share of gross revenue.
The JPC is headed by P C Chacko of the Congress.
The draft report said it was inclined to conclude that the PM was “misled about the procedure decided to be followed by DoT in respect of UAS (unified access services) licences”. Blaming former communications minister A Raja, it said the assurances given by him in all the correspondence with the prime minister to “maintain full transparency in following established rules of the department stood belied”.
The report also pulled up the NDA government for extending the licence terms for telecom operators from 10 years to 15 years, a demand made by the Cellular Operators Association of India, based on the recommendations of the erstwhile Industrial Credit and Investment Corporation of India (ICICI).
The report said the government acted “in haste by showing indulgence to the defaulting operators”. It did not wait for the report of the government’s Bureau of Industrial Costs and Pricing, which was asked to a techno-economic study of the industry. ICICI gave its report to DoT in May 1998, and the recommendations on extension of licence were cleared by the Cabinet in September 1998. JPC added that no impartial suggestions could be expected from ICICI because it was a “lender” to several companies demanding concessions from DoT.
The report blamed the NDA government for the “irregularities” committed by Reliance Infocomm Ltd (part of the undivided Ambani group), and said it cannot but hold the Department of Telecommunications “squarely responsible” for enforcing the terms and conditions of licence agreement entered with the company for providing wireless local loop (mobile services) which were to be restricted to the local area in which a subscriber is registered.
The draft report said allocation of spectrum beyond 6.2 Mhz and up to 10 per cent was done with only one per cent additional revenue charge in Delhi and Mumbai. Spectrum charges were “deliberately undervalued to favour some telecom operators, thereby causing revenue loss to the exchequer”, and were not referred to the regulator for recommendations. The key companies that got additional spectrum include Bharti and Vodafone, and the matter is now in courts.
The draft report also said it has scrutinised another decision in which the government decided to reduce the requirement of subscriber base for allocation of additional spectrum from nine lakh to four to five lakh in the metros, saying the DoT had come to a consensus on it after discussions.
However, the JPC note said the decision, which reversed an earlier one of the DoT secretary, who said there was no immediate need for additional spectrum, was taken when most of the key officials concerned were not present.
BLAST FROM THE PAST
- NDA government found responsible for extending the licence term from 10 to 15 years
- Decision based on recommendations of ICICI, a lender to many telecom companies
- Spectrum charges “deliberately undervalued to favour some telecom operators, thereby causing revenue loss to the exchequer”
- The NDA government, in 1999, had to forego revenue of Rs 42,080.34 crore, as it offered migration package to incumbent telcos to a revenue share model
- Revenue forgone also included Rs 1,443.58 crore on account of the decision of the government to give an extension on effective date of licence by six months
