2G Scam

IntroDuction1G (or 1-G) refers to the first-generation

of wireless telephone technology, mobile telecommunications. These are

the analog telecommunications standards that were introduced in the 1980s

and continued until being replaced by 2G digital telecommunications. The

main difference between two succeeding mobile telephone systems, 1G

and 2G, is that the radio signals that 1G networks use are analog, while 2G

networks are digital.

Although both systems use digital signaling to connect the radio towers

(which listen to the handsets) to the rest of the telephone system, the voice

itself during a call is encoded to digital signals in 2G whereas 1G is only

modulated to higher frequency, typically 150 MHz and up.

2 G (or 2-G) is short for second-

generation wireless telephone technology. Second generation 2G cellular telecom networks were commercially launched on the GSM standard in Finland by Radiolinja (now part of Elisa Oyj) in 1991. Three primary benefits of 2G networks over their predecessors were that phone conversations were digitally encrypted; 2G systems were significantly more efficient on the spectrum allowing for far greater mobile phone penetration levels; and 2G introduced data services for mobile, starting with SMS text messages.

After 2G was launched, the previous mobile telephone systems were retrospectively dubbed 1G. While radio signals on 1G networks are analog, radio signals on 2G networks are digital. Both systems use digital signaling to connect the radio towers (which listen to the handsets) to the rest of the telephone system.

2G has been superseded by newer technologies such as 2.5G, 2.75G, 3G, and 4G; however, 2G networks are still used in many parts of the world.

3G (3rd generation)

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2G Scam

International Mobile Telecommunications-2000 (IMT — 2000), better known as 3G or 3rd Generation, is a generation of standards for mobile phones and mobile telecommunications services fulfilling specifications by the International Telecommunication Union. Application services include wide-area wireless voice telephone, mobile Internet access, video calls and mobile TV, all in a mobile environment. a 3G system provide peak data rates of at least 200 kbit/s according to the IMT-2000 specification. Recent 3G releases, often denoted 3.5G and 3.75G, also provide mobile broadband access of several Mbit/s to laptop computers and smartphones.

4G stands for the fourth generation of cellular wireless standards. It is a

successor to 3G and 2G families of standards. Speed requirements for 4G service set the peak download speed at 100 Mbit/s for high mobility communication (such as from trains and cars) and 1 Gbit/s for low mobility communication (such as pedestrians and stationary users). A 4G system is expected to provide a comprehensive and secure all-IP based mobile broadband solution to smartphones, laptop computer wireless modems and other mobile devices. Facilities such as ultra-broadband Internet access, IP telephony, gaming services, and streamed multimedia may be provided to users.

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2G Scam

2G technologies

2G technologies can be divided into TDMA-based and CDMA-based standards depending on the type of multiplexing used. The main 2G standards are

GSM (TDMA-based), originally from Europe but used in almost all countries on all six inhabited continents. Today accounts for over 80% of all subscribers around the world. Over 60 GSM operators are also using CDMA2000 in the 450 MHz frequency band (CDMA450).

IS-95 aka cdmaOne (CDMA-based, commonly referred as simply CDMA in the US), used in the Americas and parts of Asia. Today accounts for about 17% of all subscribers globally. Over a dozen CDMA operators have migrated to GSM including operators in Mexico, India, Australia and South Korea.

 (TDMA-based), used exclusively in Japan

iDEN (TDMA-based), proprietary network used by Nextel in the United States and Telus Mobility in Canada

IS-136 aka D-AMPS (TDMA-based, commonly referred as simply 'TDMA' in the US), was once prevalent in the Americas but most have migrated to GSM.

2G services are frequently referred as Personal Communications Service, or PCS, in the United States.

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Capacities, Advantages, Disadvantages and Evolution.(CADE)Capacity

Using digital signals between the handsets and the towers increases system capacity in two key ways:

Digital voice data can be compressed and multiplexed much more effectively than analog voice encodings through the use of various codecs, allowing more calls to be packed into the same amount of radio bandwidth.

The digital systems were designed to emit less radio power from the handsets. This meant that cells could be smaller, so more cells could be placed in the same amount of space. This was also made possible by cell towers and related equipment getting less expensive.

Advantages

The lower power emissions helped address health concerns.

Going all-digital allowed for the introduction of digital data services, such as SMS and email.

Greatly reduced fraud. With analog systems it was possible to have two or more "cloned" handsets that had the same phone number.

Enhanced privacy. A key digital advantage not often mentioned is that digital cellular calls are much harder to eavesdrop on by use of radio scanners. While the security algorithms used have proved not to be as secure as initially advertised, 2G phones are immensely more private than 1G phones, which have no protection against eavesdropping.

Disadvantages

In less populous areas, the weaker digital signal may not be sufficient to reach a cell tower. This tends to be a particular problem on 2G systems deployed on higher frequencies, but is mostly not a problem on 2G systems deployed on lower frequencies. National regulations differ greatly among countries which dictate where 2G can be deployed.

Analog has a smooth decay curve, digital a jagged steppy one. This can be both an advantage and a disadvantage. Under good conditions, digital will sound better. Under slightly worse conditions, analog will experience static, while digital has occasional dropouts. As conditions worsen, though, digital

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will start to completely fail, by dropping calls or being unintelligible, while analog slowly gets worse, generally holding a call longer and allowing at least a few words to get through.

While digital calls tend to be free of static and background noise, the lossy compression used by the codecs takes a toll; the range of sound that they convey is reduced. You'll hear less of the tonality of someone's voice talking on a digital cellphone, but you will hear it more clearly.

Evolution

2G networks were built mainly for voice services and slow data transmission.

Some protocols, such as EDGE for GSM and 1x-RTT for CDMA2000, are defined as "3G" services (because they are defined in IMT-2000 specification documents), but are considered by the general public to be 2.5G services (or 2.75G which sounds even more sophisticated) because they are several times slower than present-day 3G services.

2.5G (GPRS)

2.5G is a stepping stone between 2G and 3G cellular wireless technologies. The term "second and a half generation is used to describe 2G-systems that have implemented a packet switched domain in addition to the circuit switched domain. It does not necessarily provide faster services because bundling of timeslots is used for circuit switched data services (HSCSD) as well.

The first major step in the evolution of GSM networks to 3G occurred with the introduction of General Packet Radio Service (GPRS). CDMA2000 networks similarly evolved through the introduction of1xRTT. The combination of these capabilities came to be known as 2.5G.

GPRS could provide data rates from 56 kbit/s up to 115 kbit/s. It can be used for services such as Wireless Application Protocol (WAP) access, Multimedia Messaging Service (MMS), and for Internet communication services such as email and World Wide Web access. GPRS data transfer is typically charged per megabyte of traffic transferred, while data communication via traditional circuit switching is billed per minute of connection time, independent of whether the user actually is utilizing the capacity or is in an idle state.

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2G Scam

1xRTT supports bi-directional (up and downlink) peak data rates up to 153.6 kbit/s, delivering an average user data throughput of 80-100 kbit/s in commercial networks.[3] It can also be used for WAP, SMS & MMS services, as well as Internet access.

2.75G (EDGE)

GPRS networks evolved to EDGE networks with the introduction of 8PSK encoding. Enhanced Data rates for GSM Evolution (EDGE), Enhanced GPRS (EGPRS), or IMT Single Carrier (IMT-SC) is a backward-compatible digital mobile phone technology that allows improved data transmission rates, as an extension on top of standard GSM. EDGE was deployed on GSM networks beginning in 2003—initially by Cingular (now AT&T) in the United States.

EDGE is standardized by 3GPP as part of the GSM family and it is an upgrade that provides a potential three-fold increase in capacity of GSM/GPRS networks. The specification achieves higher data-rates (up to 236.8 kbit/s) by switching to more sophisticated methods of coding (8PSK), within existing GSM timeslots.

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2G Scam

Difference Between 2G and 3G in India

Technology moves ahead making smaller and better products and it has been the same in the field of mobile phones. Starting with 1G, the country has seen the evolution of 2G and then 3G and there are talks of 4G soon arriving in India. Before moving ahead, it would be pertinent to note that G is only an acronym for generation and the real difference lies in the technologies that are adopted in wireless network. 3G rollout in India first commenced in 2008 by MTNL under the name “3G Jadoo,” there are around 2 million 3G subscribers now. The 3G deployment in India is aggressively being carried out since late last year with the conclusion of 3G spectrum auction for private operators.

2G

One step ahead of 1G, 2G uses narrow band wireless digital network. It allows more clarity of voice than 1G which used analogue signals. Both these technologies were based upon circuit switching. 2G deals with voice calls only and allows only text messaging, also known as SMS. 2G allowed roaming facility which was not possible with 1G and having a phone with 2G; one could go abroad and still connect to folks back in the country, albeit with some limitations. All the 2G networks that include GSM, CDMA and DAMPS were launched in the country in the early 1990’s and they were the first digital cellular systems.

In between the 2nd and the 3rd generations, there was an intermediate generation called 2.5G, which show some technology upgrades from 2G. The General Packet radio Service or GPRS is not used with early 2G phones. It was a development in 2.5 G, and later EDGE technology was introduced as further development to 2.5G. The present network widespread in India is 2.5 G.

3G

The 3G was introduced to overcome the hurdles that 2G could not cross. 3G uses both circuit and packet switching technologies and makes use of wide band wireless networks that allows more voice clarity and it looks as if the person we are talking to is sitting next to us. Packet Switching is the technology used for sending data in 3G. Interpretation of voice calls is done through Packet switching. 3G allowed unfettered global roaming. In addition to unmatched voice clarity and faster downloads such as musics, videos and games, there are some more features that can be enjoyed such as internet browsing, mobile TV, video conferencing, video calls, Multi Media Messaging (MMS), Mobile Gaming etc.

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2G Scam

3G network is currently being deployed in selected major cities by MTNL (3G Jadoo) and Tata DoCoMo. Bharti Airtel is to launch its 3G network roll out in early 2011. 22 regions covering many of the top cities in each state have been identified as designated telecom zones to deploy 3G network. However initially it will be rolled out in top few cities only. The other operators who were successful in the May 2010 3G spectrum auction and will be deploying the 3G network countrywide are Reliance, Vodafone, Idea and Aircel. Stel also will deploy its 3G network in some parts of Orissa and Bihar.

MTNL’s  3G services are already available in Mumbai and New Delhi both in prepaid and postpaid plans. MTNL now charges half a paise per second for a local and STD voice and video call to its own network, one paise per second for calls to other networks and data charges are 1 paise per 10KB. Per SMS charges are 0.25 Rupees local, 1 Re for STD and Re 2.50 for IDD. There is an activation charge and mothly fixed charges applicable.

The 3G services are expected to attract youngsters and heavy data users in to the 3G network.

Difference between 2G and 3G

Both 2G and 3G are merely milestones in mobile technology and represent two different phases. While 2G ruled the world of mobile phones for a decade, it is the turn of 3G now that is being widely used in the country. But there are news that 4G is soon arriving in India which indicates how fast technology is moving. There are many differences between 2G and 3G, and most of them pertain to the features available to the users of mobile phones.

Difference between 2G and 3G in India

While there is only voice transfer in 2G, 3G allows for data transfer in addition to transmission of voice

The clarity of voice in 3G is significantly more than 2G, and there are very little disturbances

3G is a much more secure technology than 2G 3G makes available many more features for mobile users such as

internet, mobile TV, video calls, video conferencing, mobile gaming whereas no such features are there in 2G One drawback of 3G is that it is not available in all parts of the country,

whereas 2G is universally available across India 3G services are pricier in the country than 2G. But now the MSNL

has reduced its 3G tariff to attract more customers

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Conclusion OF Diffrences

it would be correct to say that 3G will bring in a new mobile culture with the advanced  features available to mobile users, however 3G is not available everywhere, it will be implemented in selected areas only. While, 2G is good enough for basic telephony services and affordable to average consumers with aplomb.

2G spectrum scam

The 2G spectrum scam involved officials in the government of India illegally undercharging mobile telephony companies for frequency allocation licenses, which they would use to create 2Gsubscriptions for cell phones. According to a report submitted by the Comptroller and Auditor General based on money collected from 3G licenses, the loss to the exchequer was 176,379 crore (US$38.27 billion). The issuing of the 2G licenses occurred in 2008, but the scam came to public notice when the Indian Income Tax Department investigated political lobbyist Niira Radia and the Supreme Court of India took Subramaniam Swamy's complaints on record.

In 2008, the Income Tax department, after orders from the ministry of Home and the PMO, began tapping the phones of Niira Radia. This was done to help with an ongoing investigation into a case where it was alleged that Niira Radia had acted as a spy.

Some of the many conversations recorded over 300 days were leaked to the media. The intense controversy around the leaked tapes, became known in the media as the Radia tapes controversy. The tapes featured some explosive conversations between Politicians, Journalists and Corporate Houses. Politicians from Karunanidhi to Arun Jaitley, journalists like Barkha Dutt and Vir Sanghvi and Industrial groups like the Tata's were either participants or mentioned in these explosive tapes.

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2G Scam

Parties Involved

The selling of the licenses brought attention to four groups of entities - politicians who had the authority to sell licenses, bureaucrats who implemented and influenced policy decisions, corporations who were buying the licenses, and media professionals who mediated between the politicians and the corporations on behalf of one or the other interest group.

Politicians involved

Raja, the Ex-Minister of Communications and Information Technology who was the minister when the controversial second round of spectrum allocations took place. Mr.Raja, an MP of theDravida Munnetra Kazhagam from the Nilgiris constituency, was forced to resign following the public outcry.

Subramaniam Swamy, activist lawyer and politician, whose letters to the Prime Minister demanding action and affidavits and cases in the Supreme Court bought the issue into the public limelight.

Arun Shourie, the minister for Telecom during 2003 in the previous BJP regime. It was Arun Shourie who introduced the controversial technology neutral "Unified Access License", which allowed fixed line operators who had paid much lower license fees to offer mobile phone services, at first in the limited WLL mode (Wireless in Local Loop) and later, following an out of court settlement between mobile operators and the BJP govt, full mobility. This gave an advantage to players like Reliance and Tata Teleservices who

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managed to get mobile spectrum without paying the hefty fees that earlier operators like BPL Mobile had paid.

Pramod Mahajan, the minister for Telecom between 1999 and 2003. Mr.Mahajan was the minister when the BJP Government took the controversial decision to shift from a license fee based regime to a revenue sharing model which was roundly condemned both by political parties and by economic experts. The Comptroller and Auditor General also filed adverse reports citing a loss of over  64,000 crore (US$13.89 billion) caused by this decision. The crux of A. Raja's defence is that he was following a policy of 2G allocations put in place by the BJP and it would be unfair to levy prices based on 3G spectrum to 2G licenses. Pramod Mahajan, who was seen to be friendly with various corporate houses, had been bought in to replace Jagmohan as Telecom minister just days before the decision was announced. The biggest beneficiary of this abrupt shift in policy was Reliance Infocomm who gained thousands of crores of spectrum without paying a dime in additional license fees. Pramod Mahajan and his cronies are reported to have received benami shares of Reliance Industries as a "gift”

Bureaucrats involved

S Behuria, former telecom secretary who served in the DOT at the time of the 2G allocation.

Pradip Baijal, a bureaucrat who is alleged to have implemented policies that favored certain Telecom companies when he was heading the TRAI. Post retirement, Baijal joined Noesis, a consulting firm promoted by Niira Radia. A Raja has made references to Baijal's decisions in 2003 as the basis for his decisions in 2008. The houses and offices of the bureaucrat were recently raided by the Central Bureau of Investigation as part of their investigations.

Corporations involved

Unitech Group a real estate company entering the telecom industry with its 2G bid; sold 60% of its company stake at huge profit to Telenor after buying licensing (Including land values properties for towers)

Swan Telecom sold 45% of its company stake at huge profit to Emirates Telecommunications Corporation (Etisalat) after buying licensing.

Loop Mobile

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Videocon Telecommunications Limited

S Tel

Reliance Communications

Sistema Shyam Mobile (MTS) – Sistema Mobile Russia

Tata Communications

Media persons and Lobbyists Involved

Nira Radia, a former airline entrepeneur turned corporate lobbyist whose conversations with politicians and corporate entities were recorded by the government authorities and leaked creating theNira Radia tapes controversy

Barkha Dutt, an NDTV journalist alleged to have lobbied for A. Raja's appointment as minister

Vir Sanghvi, a Hindustan Times editor alleged to have edited articles to reduce blame in the Nira Radia tapes

Shortfall of money

Raja arranged the sale of the 2G spectrum licenses below their market value. Swan Telecom, a new company with few assets, bought a license for 1,537 crore (US$333.53 million). Shortly thereafter, the board sold 45% of the company to Etisalat for  4,200 crore (US$911.4 million). Similarly, a company formerly invested in real estate and not telecom, the Unitech Group, purchased a license for  1,661 crore (US$360.44 million) and the company board soon after sold a 60% stake in their wireless division for 6,200 crore (US$1.35 billion) to Telenor. The nature of the selling of the licenses was that licenses were to be sold at market value, and the fact that the licenses were quickly resold at a huge profit indicates that the selling agents issued the licenses below market value.

Nine companies purchased licenses and collectively they paid the Ministry of Communications and Information Technology's telecommunications division 10,772 crore (US$2.34 billion). The amount of money expected for this licensing by the Comptroller and Auditor General of India was 176,700 crore (US$38.34 billion).

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Relationship between media and government

Media sources such as OPEN and Outlook reported that Barkha Dutt and Vir Sanghvi knew that corporate lobbyist Nira Radia was influencing the decisions of A. Raja. The critics alleged that Dutt and Sanghvi knew about corruption between the government and the media industry, supported this corrupt activity, and suppressed news reporting the discovery of the corruption.

Ratan Tata petitions over leak

The tapes leaked to the public include conversations between Nira Radia and Ratan Tata. Tata petitioned the government to acknowledge his right to privacy and demanded accountability for the leak, with the Minister for Home Affairs, CBI, Indian Income Tax Department, the Department of Telecommunication, and the Department of Information Technology as respondents in the petition.

Response to scam

In early November 2010 Jayalalithaa accused the Tamil Nadu state chief minister M Karunanidhi of protecting A. Raja from corruption charges and called for A. Raja's resignation. By mid NovemberA. Raja resigned.

In mid November the comptroller Vinod Rai issued show-cause notices to Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to respond to his assertion that all of the 85 licenses granted to these companies did not have the up-front capital required at the time of the application and were in other ways illegal. Some media sources have speculated that these companies will receive large fines but not have their licenses revoked, as they are currently providing some consumer service.

In response to the various allegations , the Govt of India has replaced the then incumbent Telecom minister ,A Raja with Kapil Sibal who has taken up this charge in addition to being the Union minister for Human Resources Development.Mr Sibal contends that the "notional" losses quoted are a result of erroneous calculations and insists that the actual losses are nil.

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How 2g scam happen in India

The government today rejected outright the report that established the 2G spectrum scam as India's largest con-job, and left the government vulnerable to a particularly ferocious attack by the Opposition.

The report by the government's auditor, the Comptroller and Auditor General (CAG), said losses from the allocation of 2G spectrum in 2008 could add upto Rs. 1.76 lakh crore. The report pushed A Raja to resign as Telecom Minister in November. 

Kapil Sibal, who replaced Raja, described the CAG report today as "completely erroneous".  While adding that he respects the CAG, Mr Sibal said, "We believe the exercise (by CAG) was fraught with very serious errors which resulted in a kind of sensationalismwhich has allowed the Opposition to spread utter falsehood to the people of India and we object to it."

Sacrificing the credibility of the government's auditor, Mr Sibal said, "We are extremely pained at the methodology adopted by CAG. Some figures have no basis whatsoever. But it is human to err and to err is human." 

In fact, Mr Sibal claims that the 2G allocation in 2008 by Mr Raja did not see any losses at all for the government - a stand that has been attacked by the BJP.  

Mr Sibal states that among other mistakes, CAG's calculations have been based on 2010 prices for licenses granted in 2008. He also stresses that CAG assessed the value of 2G spectrum on the basis of 3G spectrum auctioned in May 2010. But 3G spectrum is 3-4 times more efficient than 2G, he stressed, and therefore, when the math is redone, there are no losses at all.

Sibal alleged that there were presumed losses even in 1999, when the then NDA government switched from a license-fee regime to a revenue-share model with telecom companies. The Telecom Minister said his predecessor A Raja's first-come-first-serve policy was also adopted by the NDA in 1999.

"If the entire argument is that there was no loss to the exchequer then why did Raja resign from the Government?" asked senior BJP leader Arun Jaitley.

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The BJP says Mr Sibal has yet to answer why 2G spectrum was sold in 2008 at rates decided in 2001. "Telecom Minister Kapil Sibal's entire argument is fallacious. He is just playing with statistics... confusing the position," said Jaitely.  

2G scam: 'Raja to blame for losing Rs 1.76L cr'

Senior Bharatiya Janata Party (BJP) leader L K Advani said that the 2G spectrum scam may be the country's biggest scandal since Independence.

The BJP leader also welcomed the move by the government to set up a committee to look into the preparations for the 2010 Commonwealth Games and hoped that no wrongdoer will be spared.

In the latest post on his blog, Advani referred to headlines last week about the Comptroller and Auditor General's report on 2G spectrum allocation.

"The Comptroller and Auditor General has reported that A Raja's Telecom Ministry carried out the entire spectrum allocation in 2008 in an 'arbitrary manner' ignoring the advice of the Law Ministry, the Finance Ministry and even the Prime Minister," Advani wrote.

He said the CAG has assessed the loss suffered by the country due to this arbitrary approach at a stupendous Rs 1.40 lakh crores.

"This CAG assessment may well make this spectrum scam the biggest scandal since Independence," he said. Citing the CAG report, he said, "The telecom ministry for no apparent and logical or valid reasons ignored the advice of ministries of finance and law, avoided the deliberations of the Telecom Commission to allocate 2G spectrum, a scarce finite national asset...Despite all agencies having knowledge of scarcity and under pricing of spectrum, the entry fee for issue of licenses continued to be pegged at the rates determined in 2001."

Advani noted that the CAG has rejected telecom ministry's argument that spectrum allocation was done in accordance with the policy laid down by the previous government. The report says that the claim that the policy of predecessors was followed is wrong and the Cabinet in 2003 had directed auction for all allotments in future, Advani wrote.

Referring to another headline last week on the Supreme Court's observations in a corruption case, Advani said these reflected how angry and exasperated even the country's highest court feels when it repeatedly runs into corruption cases. On the CWG inquiry, Advani said, "It is highly gratifying that immediately after the conclusion of the Commonwealth Games in New Delhi; Prime Minister Dr. Manmohan Singh has announced that the allegations of

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corruption and financial mismanagement in connection with the games would be probed."

"The country hopes that the probe would be thorough, and that no wrongdoer would be spared. And there would be no search just for scapegoats," he said.

The Comptroller and Auditor General of India on Wednesday said it has submitted to the government the report on the 2G spectrum allotment that is presumed to have caused a revenue loss of up to Rs 1.76 lakh crores.

"Yes, we have submitted the final report to the government. I cannot disclose the findings of the report. It is up to the government when it will be tabled in Parliament ... may be within a fortnight or it may take long," Comptroller and Auditor General Vinod Rai told reporters here.

Sources in the know say that the CAG has accused the telecom ministry for undervaluing 2G spectrum, sold to new players in 2008, and held that the allotment price was not realistic, which has caused a revenue loss of up to Rs 1,76,700 crores to the government.

The report is also believed to have castigated telecom minister Raja for ignoring the advice of finance and law ministries on allocation of 2G spectrum to benefit a few operators.

It is also believed to have criticized telecom regulator TRAI for standing as a helpless spectator when its recommendations were being ignored or misused.

However, no confirmation on CAG's reported comments could be obtained. The report is believed to have said that the telecom ministry took arbitrary decisions while allotting 2G spectrum, bundled with licenses in January 2008.Sources said a copy of the report has been sent to the finance ministry and to the President. The process usually takes 10-15 days to finalize and then it would be tabled in Parliament. The month-long winter session of Parliament began on November 9.

Nine firms were issued licenses, bundled with start up of 2G spectrum, in January 2008 at Rs 1,658 crores for pan-India operations.

The CAG report said the price at which the spectrum was allotted in 2008 was based on 2001 prices, which was quite low and has resulted in a loss to the government exchequer.

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The report also said that Raja ignored the advice of the law ministry and Prime Minister and advanced the cut-off date for giving the Letter of Intent (LoI).

The telecom ministry had, however, hit at the CAG saying the policy decisions cannot be "assailed" as arbitrary and debunked CAG's assertion that 2G spectrum was allocated in an arbitrary manner.

"Decisions (on spectrum) taken on the basis of New Telecom Policy of 1999 and the Cabinet decision of 2003, coupled with periodic and respective TRAI's recommendations.

"(This) cannot be assailed by the audit as arbitrary or cause of exchequer loss until and unless the entire policy devised with legislative backing is changed or modified by the same authorities concerned," DoT had said in its reply to the Comptroller and Auditor General. CAG has reportedly put the revenue loss to exchequer at up to Rs 1.40 lakh crores, in addition to another Rs 36,700 crore on allocation of spectrum beyond contractual limit to existing nine.

DETAILS OF THE SCAM

Biggest scam ever 1.76 lakh crores. Spectrum allocation at Rs 1658 crores for pan India operations on the

basis of 2001 prices. TRAI·s recommendations for allocation as per present market rates

ignored. 85 out of 122 licenses given to ineligible applicants. Licenses issued on first come first serve basis. No proper auction process followed, no bid invited. Companies like Swan Telecom, Unitech, Datacom, stol sold their licenses

to FDI’s. The Union Minister of Telecommunications Mr. A. Raja, now being

popularly known as SPECTRUM Raja has become a famous personality overnight. The

Spectrum Scandal which

Has cost the government more than rupees 1 lakh crores is supposed to be the biggest scam the

Country has ever seen.

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2G Scam

The Ministry of Telecommunications held by Raja is in charge for the allocation of Spectrum To the companies which offer mobile phone services in the country. In the year 2008, 2nd Generation (2G) Spectrum for GSM service providers was allotted to the private players.

There were a lot of controversies in the way Spectrum allocation took place by 2008 itself, Now the minister’s office is being raided by the CBI for further investigation.

In 2008. Both domestic as well as MNC players consider investing in Telecommunications Extremely profitable. In this sort of a scenario if the government decides to fix the same price, Following the same procedure as it did in the year 2001 then it would be a deliberate attempt

To put too small a price for the 2G spectrum.

The Telecom Regulatory authority of India (TRAI) is a statutory body found by the Government of India in 1995 to avoid excessive government interference in pricing and Policy. The TRAI had advised the Telecom ministry to auction the Spectrum License in the Years 2001, 2003, 2007 respectively. But the Telecom ministry held by Raja had completely Neglected TRAI’s recommendations and allotted the 2G spectrum license on first come first Serve basis. More than that fact, Mr. Mishra (TRAI - Head) in his letter dated 14th Jan 2008To the Telecom Ministry had clearly pointed out that the Ministry has ignored all the crucial Recommendations of TRAI and considered a few points for name sake.

Datacom Solutions, Yestel, Shyam Telelink, Loop Telecom, Spice, Idea Cellular, TataTele service, Swan and Unitech were given license for 2G Spectrum. The total fee generated by the government for selling license to the above 9 companies is10, 772.68 crore.

Out of the companies mentioned above, the two companies Swan and Unitech do not have Any prior experience in the business of mobile phone, broadband or related services. Swan Telecom has obtained Spectrum license to operate in 14 circles for an amount of 1537.01 crore while Unitech has obtained license to operate in 22 circles by paying 1651 crore respectively.

Within a matter of six months these two companies have sold majority of their stake to Foreign companies. Swan Telecom had sold 45% of its shares for a whopping amount of 4050 Crore to a company called Etisalat which is based out of UAE due to which the valuation of Swan Telecom had increased to Rs. 9990.56 crore. Unitech had sold 60% of its stares to a Norway based

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company Telenor for Rs. 6120 crore due to which the valuation of Unitech had Increased to a monstrous amount of 10, 731 crore. Just by leveraging their ability to acquire Spectrum license, Swan and Unitech had made massive 700% return on their investment Within a matter of six months.

Raja’s ministry made Rs. 10,772.65 crore by selling 2G license to 9 companies whereas Swan and Unitech just by selling half of their stake had proved the fact that their license is worth more than 20,000 crore. If we consider the market value of these two companies, the Government by selling license to these nine companies should have generated 70, 022.42crore as license fee. In that way our country has incurred a loss of over Rs. 60, 000 crore.

The Central Vigilance had written a letter to the Telecom Department stating the Irregularities in allocation of 2G Spectrum as on 15th of December 2008. It had clearly Mentioned that it is highly disappointed with the way 2G Spectrum was licensed. Even after

That, Raja while answering to a question in Parliament had told that 2G Spectrums was allotted On first come first serve basis; he had also mentioned that neither TRAI nor the Vigilance had Raised objections, which is against truth. TRAI head Mr. Mishra had clarified in an interview (December 2008) that nowhere in the Guidelines or recommendations of TRAI it had mentioned that Spectrum needs to be allotted on first come first serve basis. The Chief of the Central Vigilance Mr. Prathyush Sinha had told in an interview (April 2009) that it is evident that there have been severe irregularities in 2G Spectrum allocation.

Despite all misshapes the Congress party, Prime Minister and the Finance Minister are trying to hold up the Telecom Minister A. Raja due to political pressure from the DMK which is Obvious. In fact Raja has said on record that whatever he has done has been discussed and in Consent with the Prime Minister. This very fact is even more shocking than the scam in itself.

Let us hope that the Congress led UPA government does not pressurize the CBI considering The interest of its ally, the DMK.

WHAT IS SPECTRUM SCAM?

2G licenses issued to private telecom players at throwaway prices in 2008

CAG: Spectrum scam has cost the government Rs. 1.76 lakh crore

CAG: Rules and procedures flouted while issuing licenses

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WHAT ARE THE CHARGES ON FORMER TELECOM MINISTER RAJA?

CHEAP TELECOM LICENSES Entry fee for spectrum licenses in 2008 pegged at 2001 prices Mobile subscriber base had shot up to 350 million in 2008 from 4

million in 2001 NO PROCEDURES FOLLOWED Rules changed after the game had begun Cut-off date for applications advanced by a week Licenses issued on a first-come-first-served basis No proper auction process followed, no bids invited Raja ignored advice of TRAI Law Ministry, Finance Ministry TR AI had recommended auctioning of spectrum at market rates FAVOURITISM, CORPORATES ENCASH PREMIUM Unitech, Swan Telecom got licenses without any prior telecom

experience Swan Telecom given license even though it did not meet eligibility

criteria Swan got license for Rs. 1537 crore, sold 45% stake to Etisalat for Rs.

4200 crore Unitech Wireless got license for Rs. 1661 crore, sold 60% stake for Rs.

6200 crore all nine companies paid DoT only Rs. 10,772 crore for 2G licences THE SCAM IN NUMBERS1.76 lakh cr Presumptive loss caused to exchequer in 2G scam 85 companies got spectrum licences but later found ineligible 37,000 cr is what govt

can make if companies holding excess spectrum are made to pay for it 127,292 cr is whatUnitech and Swan made from sale of equity to other

players

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REPORTS 1.

New Delhi:  The latest revelations on the 2G scam suggest a careful confluence between the Telecom Ministry, when it was headed by A Raja, and a series of big business houses.

"85 of the 122 licenses were issued to companies which suppressed facts, disclosed incomplete information and submitted fictitious documents to DoT and thus used fraudulent means of getting licenses and thereby access to spectrum"  -this is one of the more biting conclusions of the report prepared by the government's auditor, the Comptroller and Auditor General (CAG).

The report - which was leaked to the media last week and forced Raja's resignation - was tabled in Parliament today.  It is unflinching in its indictment of Raja, blaming him for violating guidelines, indulging in favouritism and costing the government Rs. 1.76  lakh crores by giving away 2G spectrumn in 2008 at bargain basement prices to inexperienced new players. The CAG report says Raja ignored the suggestions of the Law Ministry, the Finance Ministry, and even the Prime Minister. "The PM had stressed on the need for a fair and transparent allocation of spectrum..... Brushing aside the advice, the Department of Telecom (DoT) in 2008 proceeded to issue licenses for 2G spectrum at 2001 prices, flouting all rules and procedures."

Companies that benefited from Raja's twisted rules include Reliance Telecom (owned by Anil Ambani), which was allocated spectrum ahead of the others. The Department of Telecom, the report says, "did not follow its own practise of first-come first-served in letter and spirit."

The report also states that Swan Telecom was given undue advantage, and that it served effectively as a front for Reliance. The charges in the CAG report are that Swan should not have been considered for a license because Reliance Communications held 10.71% stake in Swan - and according to the rules, a telecom operator cannot own more than 10% stake in another telecom company operating in the same service area . Reliance Telcom issued a statement this evening  that declares it did not have any  shareholding in Swan when the license was granted (the CAG report's

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allegation is that Reliance owned stake when Swan applied for the license).

Swan's application should have been rejected initially by DoT, says the report.

The CAG report says that nine companies got more spectrum than stated in their contracts.  They include Bharti, Vodafone, Idea, BSNL, Reliance, and Aircel.

CAG indicts Unitech Wireless

Another big beneficiary of the 2G spectrum allocation was Unitech Wireless, which had no experience in the telecommunication sector. 

After Unitech got the license for a throwaway price of Rs. 1,661 crore, it sold 60 per cent stake to Telenor Asia for a whopping Rs. 6,200 crore.

In its report, CAG indicts Unitech saying the high value paid by Telenor was for the 2G spectrum, and not for other inputs as claimed by Unitech. It also says that such huge equity infusion, which should have accrued to the public exchequer, went as a favour to the new licensees for enriching their business.

Speaking to NDTV, the telecom giant Telenor said that its investment in Unitech Wireless conformed to all regulations.

The political crisis continues

The stand-off between the government and the Opposition over 2G scam continues.  The Opposition wants a Joint Parliamentary Committee (JPC) to investigate the 2G scam.  The government has said there is no question of agreeing to this.

Parliament has not functioned at all this winter session - the Opposition says it won't let the House get to work till a JPC is announced. 

There were loud and angry scenes in Parliament once again today - the Lok Sabha has been adjourned till Thursday, since tomorrow is a national holiday for Eid.

A lunch meeting with Opposition leaders called by Finance Minister Pranab Mukherjee to try and end the deadlock, has ended without a breakthrough.  Mukherjee, who also met senior BJP leader LK Advani at the latter's Parliament office earlier, emerged from the lunch meeting to say, "We are for discussion. No solution has been found yet. They want a JPC."

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Sibal releases 2G scam report, blames NDA

NEW DELHI: Blaming the previous Bharatiya Janata Party (BJP)-led government for the current mess over telecom spectrum allotment, Communications Minister Kapil Sibal Friday said deviations in policy had actually started in 2003.

He also wondered why this crucial issue was being sidestepped by the opposition while blaming the United Progressive Alliance (UPA) government of Prime Minister Manmohan Singh, which took charge in May 2004, for the so-called spectrum scam."All decisions on allocation of spectrum, starting from 2003, were incorrect," Sibal told a press conference here, sharing the report of the single-man panel of former Supreme Court Judge Shivraj V. Patil to examine the spectrum policy since 2001.In the process, he covertly admitted that the policy adopted by the UPA regime on allocation of spectrum, a precious national resource that helps delivering wireless mobile telecom services, was also not proper.The minister also said that the improper policy of first-come-first-served basis to allocate the scarce spectrum was also started during the tenure of National Democratic Alliance (NDA) government."Those who are making allegations today are the ones who actually began it. Why wasn't there inquiry then? Ministers who did not follow cabinet decision were not questioned," Sibal said.The Telecom Regulatory Authority of India (TRAI) had suggested in 2003 that additional telecom players could be introduced through multi-stage bidding process and the cabinet accepted it in 2003."But on Nov 17, 2003 the then secretary of Department of Telecom (DoT) approved new procedures for award of licenses that were later on approved by the then communications minister," Sibal said, quoting from Justice Patil's report."The entire report will be shared with investigation agencies to determine culpability of all public servants involved in the grant of licences or spectrum between 2001 t0 2009," he added.Sibal's comments summarising the Patil committee report comes in the backdrop of the arrest two days ago of DMK's A. Raja who was overseeing the communications ministry till Nov 7 last year when he was forced to quit in the wake of an adverse audit report.The official audit institution the Comptroller and Auditor General of India had said Raja's policies on spectrum allocation had resulted in the loss of between $12.8 billion and $40 billion to the exchequer.The issue dates to 2008 when nine telecom companies were issued airwaves and licences for 2G mobile phone services at Rs.1,658 crore (less that $350 million) for a pan-India operation. As many as 122 circle-wise licences were issued.The Central Bureau of Investigation (CBI) had arrested Raja and two of his aides Wednesday on two counts for alleged misuse of office in allocation of spectrum and amassing wealth higher than the known and legal sources of income.

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The two aides were former telecom secretary Siddartha Behura and Raja's personal secretary R.K. Chandolia. Raja, once a powerful minister, was alleged to have misused his office and given away spectrum at below market rates.Sibal's comments also came on a day when the prime minister said corruption can dent India's image, hamper good governance and needed to be tackled boldly and quickly."Corruption strikes at the roots of good governance. It is an impediment to faster growth. It dilutes, if not negates, our efforts at social inclusion," he told an annual conference of chief secretaries here."A systemic response needs to be in place to reduce opportunities for corruption".

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CONCLUSION

Date of Judgment December 16, 2010

The petitioners aggrieved by refusal of the Division Bench of the Delhi High Court to entertain the writ petition for a court monitored investigation by the Central Bureau of Investigation ( `the CBI') or a Special Investigating Team into what has been termed as `2G Spectrum Scam' for unearthing the role of respondent A. Raja, the then Union Minister for the Department of Telecommunications (DoT), senior officers of that department, middlemen, businessmen and others, had  invoked the jurisdiction of the Supreme Court under Article 136 of the Constitution.

 

Appellants argued that the allocation of spectrum on 10.1.2008 had resulted in huge loss to the public exchequer and, therefore, a thorough probe was necessary by an independent agency so that all the persons who may be found guilty were brought before law and punished. Appellants argued that the Court should direct the CBI to conduct investigation on various issues including grant of permission for use of dual/alternate technology to three operators a day before the policy decision was announced to the public by means of press release dated 19.10.2007, the change of cutoff date from 1.10.2007 to 25.9.2007, issue of LOIs by DoT on 10.1.2008, gross violation of the policy of first-come-first- served, non compliance of the rollout and other obligations by the licensees, failure of the TRAI and DoT to ensure that the licensee complied with the conditions on which they were permitted to use the spectrum and huge loss  caused to the public exchequer by manipulative mechanism as also sale of equities by different licensees to foreign companies.   

Appellants submitted that since the spectrum was scarce, the grant of licenses on the basis of 2001 price was ex facie contrary to public interest and a mala fide action on the part of respondent A Raja and officers of DoT who had connived with the private operators and others including those in realty and infrastructure sectors for extraneous considerations. It was further submitted that the CAG had assessed the loss by using different methods and, therefore, the report prepared by him should constitute a basis for further investigation. Appellants made a pointed reference to the finding recorded by the CAG that soon after getting licenses for a price of Rs.1600 crores or less, the licensees have transferred their stakes to the operators outside the country and made profits running into many thousand crores.

CBI relying upon the various judgments of the Supreme Court argued that the Court should not make any order which may cast any reflection on the ability of the CBI to conduct the investigation into a case in which allegations

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of corruption have been leveled against various functionaries of the Government. During the course of hearing, the learned Solicitor General and senior counsel appearing for CBI stated that the Government of India and the CBI had no objection to a Court monitored investigation by the CBI, but submitted that there was no reason for appointment of a Special Investigation Team. It was further submitted that the investigation being conducted by the CBI can be supervised by the two Vigilance Commissioners subject to the limitation contained in proviso to Section 8(1) of the Central Vigilance Act.

The Supreme Court held that the Division Bench of the High Court committed a serious error by dismissing the writ petition at the threshold ignoring that the issues raised by the appellants. The Supreme Court was, prima facie, satisfied that the allegations contained in the writ petition and the affidavits filed before the Court, needed a thorough and impartial investigation. However it did not consider it necessary to appoint a Special Team to investigate what the appellants had described as 2G Spectrum Scam because the Government of India had, keeping in view the law laid down in Vineet Narain's case and orders passed in other cases, agreed for a Court monitored investigation.    The Court issued the following directions:

i. The CBI shall conduct thorough investigation into various issues highlighted in the report of the Central Vigilance Commission, which was forwarded to the Director, CBI vide letter dated 12.10.2009 and the report of the CAG, who  have prima facie found serious irregularities in the grant of licenses to 122  applicants, majority of whom are said to be ineligible, the blatant violation of  the terms and conditions of licences and huge loss to the public exchequer running into several thousand crores. The CBI should also probe how licences were granted to large number of ineligible applicants and who was responsible for the same and why the TRAI and the DoT did not take action  against those licensees who sold their stakes/equities for many thousand crores and also against those who failed to fulfill rollout obligations and  comply with other conditions of licence.

ii. The CBI shall conduct the investigation without being influenced by any  functionary, agency or instrumentality of the State and irrespective of the position, rank or status of the person to be investigated/probed.

iii. The CBI shall, if it has already not registered first information report in the context of the alleged irregularities committed in the grant of licences from  2001 to 2006-2007, now register a case and conduct thorough investigation  with particular emphasis on the loss caused to the public exchequer and  corresponding gain to the licensees/service providers and also on the issue of  allowing use of dual/alternate technology by some service providers even before the decision was made public vide press release dated 19.10.2007.

iv. The CBI shall also make investigation into the allegation of grant of huge loans by the public sector and other banks to some of the companies which have succeeded in obtaining licences in 2008 and

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find out whether the officers  of the DoT were signatories to the loan agreement executed by the private companies and if so, why and with whose permission they did so.

v. The Directorate of Enforcement / concerned agencies of the Income Tax   Department shall continue their investigation without any hindrance or interference by any one.

vi. Both the agencies, i.e., the CBI and the Directorate of Enforcement shall share information with each other and ensure that the investigation is not hampered in any manner whatsoever.

vii. The Director General, Income Tax (Investigation) shall, after completion of analysis of the transcripts of the recording made pursuant to the approval accorded by the Home Secretary, Government of India, hand over the same to CBI to facilitate further investigation into the FIR already registered or which   may be registered hereinafter.  

The progress reports based on the investigations conducted by the CBI and the Enforcement Directorate were directed to be produced before the Court in sealed envelopes on 10.2.2011

 

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