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Raja played by outmoded rules

delhi Updated: Nov 15, 2010 20:50 IST
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Communications minister A Raja is no stranger to controversy. The first one in his three-and-a-half year tenure erupted within two weeks of his taking over as the minister, in May 2007. He asked officials of public sector telco Bharat Sanchar Nigam Ltd (BSNL) to cancel a tender of about R22,000 crore for procuring GSM equipment, as the price quoted by the lowest vendor was too high.

The legal opinion of additional solicitor general Gopal Subramanium came to the rescue of BSNL, and the tender went through. However, in the process BSNL negotiated with the vendor and got the prices down by about 12 per cent, a saving grace for Raja.

His next controversial decision was in allowing CDMA players — mainly Reliance Communications (RCom) and Tata Teleservices — to offer mobile telephony on GSM technology. They were allotted spectrum at R1,650 crore for pan-India operations.

Incumbent GSM players cried foul that this was backdoor entry for RCom and Tata in GSM, and appealed to the telecom dispute settlement appellate tribunal (TDSAT).

However, their plea was rejected by TDSAT giving Raja another reason to smile.

The mother of all controversies came in January 2008, when Raja issued licences along with spectrum at a price of R1,650 crore to new entrants in the telecom business on a first-come-first-served basis.

Opposition parties said the government could have earned higher revenue if spectrum had been auctioned. Later, CAG calculated loss to exchequer at about R1,70,000 crore.

Both the finance ministry and the PMO had advised Raja to take the auction route for allotting licences. Raja argued that he could not change the policy midway, and would follow existing rules and regulations.

He said he had the backing of the TRAI . This was, however, refuted by the then-TRAI chairman, Nripendra Misra.

“To apply 2001 prices in 2008 time frame under completely different market conditions was utter disregard of simple economic theory that the price of a scarce resource can not remain static,” said BK Syngal, former CMD of VSNL, now Tata Communications.

Raja does not agree with this. He said all decisions during his tenure were as per rules and regulations. He also said he kept the PM in the loop when he took the decision to allot 2G licences.

However, Raja’s regime did the consumers a good turn as the new players initiated price war and the operators started offering tariff on a per-second basis.

The prices of telecom services were slashed by more than 40% during his regime.