SC on 2G Auction

The Supreme Court has lashed out at the government for failing to put all airwaves freed up by licence cancellation up for auction, observing that even holding back 0.1% of the airwaves was “not acceptable” and would be construed as a “violation” of its orders.
The bench consisting of Justice GS Singhvi and Justice KS Radhakrishnan were reacting to the auction carried out earlier this month, in which 390 MHz had been put up for sale out of the 473 MHz that had been freed up after the court cancelled 122 licences issued by former telecom minister A Raja under controversial circumstances in early 2008.
Monday’s hearing was specially scheduled to allow the court to monitor whether the government complied with its February 2 order to place ‘all’ airwaves in the 2G band up for auction. If the tone and tenor of the court’s hearings are anything to go by, the government may have a tough time making its case.
However, the court passed no final order even as it expressed its displeasure that an affidavit explaining DoT’s actions was signed by an under-secretary, underscoring, the court said, the government’s casual approach. A DoT official said this would be corrected at the next hearing on November 26.
As soon as the hearing got underway, the government through senior counsel PP Rao sought permission to file a compliance report on the recommendations of Telecom Regulatory Authority of India, or Trai. But Rao’s attempts to show that the auction was in keeping with the court orders drew a barrage of fire. Justice Singhvi first sought to know why the government had not placed all airwaves up for bid. “Our orders nowhere refer to 800, 900 or 1800 MHz,” he said.
He lamented the fact that the government had failed to draw the court’s attention to the fact that only a part of the airwaves vacated by the February 2 order cancelling licences were being put up for auction. “We were not informed that this part of the band was not being auctioned. At least some responsible official should have informed the court that this was being auctioned and this wasn’t for grant of licences.” A total of 473 MHz was freed up after licences were cancelled and 390 MHz was put up for auction. In its affidavit, the DoT said it had complied with all of the court’s directions. It said a decision to auction limited spectrum was taken after considering recommendations of Trai, after extensive consultations with all stakeholders.
“The initial recommendation of Trai dated 23.4.2012 and the final recommendation dated 12.5.2012 also made clear that the quantum of spectrum proposed to be auctioned was not the same as that quashed by this court, and that the recommendations had examined this issue in detail, including in the light of the central government decision in 2011.” The guidelines of the auction issued on July 3 also made this clear, it said.
Cellular Operators’ Association of India Director-General Rajan Mathews, however, contested the government stand. He said the industry body had written to several government bodies, including DoT and the EGoM, that the government must auction all available spectrum.
The DoT official said a revised affidavit, this time signed by the secretary, will state that the government had acted as per Trai’s views and had gone out of its way to relax some of the regulator’s recommendations by doubling the amount of airwaves that could be put up for sale.
The affidavit will also state that Trai had suggested spectrum sale be restricted as it was looking into the future road map for the sector and had to address concerns such as level playing field in the 900 MHz band, renewal of licences, and adherence to the road map specified in the National Telecom Policy 2012.
The court, before passing an order, also sought the views of senior lawyer Aspi Chenoy, representing COAI, on the issue.
“One-third of spectrum was withheld for other reasons when the only issue (being agitated) was the modality (of allocation),” Chenoy contended. The court told the government that it must address this point in its fresh affidavit.
The lawyer also said 19 of Tata Teleservices’ licences awarded during Raja’s time should have been cancelled, but the court said it would deal with this issue later.
Activist lawyer Prashant Bhushan and Subramanium Swamy alleged that the government had ensured there was limited bidding interest.
Bhushan alleged the government had informed all existing operators that they would henceforward be charged auction prices when their licences came up for renewal. “The government in effect told the operators that it is not in your interest to bid to increase price as you have to pay it later,” he charged. He also faulted the government for lack of investor interest in the 800 MHz band, used by CDMA operators. The government in its affidavit filed also claimed telecom companies did not raise the issue of noncompliance of the Supreme Court’s judgment at any stage prior to participation in the auction.