What is 2G Scam?

2010’s is one telecom story that will keep ringing in people’s minds for years to come – leaked tapped conversations of a clutch of India’s over 700 million phone subscribers outed how lobbying may have led to an alleged Rs 1.76 lakh crore scam in the sale of radio waves.

All hell broke loose after the publication of the tapes, recorded by the Revenue Intelligence department between 2008-09, and the Opposition brought Parliament to a grinding halt demanding a certain probe.

If proved, this scam may turn out to be the biggest India has ever seen. The developments have already over-shadowed the remarkable performance of the sector that has grown by leaps and bounds by adding up to 20 million new subscribers every month. There are already over 700 million phone subscribers in India.

The allegations of how companies benefited from lobbying with the Telecom Ministry comes at a time when the industry is standing on the threshold of a new technology – 3G, the spectrum for which was auctioned earlier this year.

It was based on the prices discovered during the 3G spectrum (radio waves) auction that government auditor CAG separately arrived at the conclusion that the exchequer lost Rs 1.76 lakh crore in potential revenue by selling 2G spectrum in 2008 at 2001 prices.

The massive scam has more than once brought into question the very survival of the UPA-II government, given the Opposition parties unrelenting demand for a Joint Parliamentary Committee probe. Fears are that the Budget Session of Parliament may go the same way as the Winter Session, when no business in the interest of the common man was transacted.

The allegations have already claimed their first scalp, with A Raja resigning as Telecom Minister. This was followed by CBI raids on the premises of Raja as well as his close aides, including his former personal secretary, a former Telecom Commission Chairman and a former TRAI Chairman and some senior officials of the Department of Telecom.

The alleged scam led to a change of guard at Sanchar Bhawan, which houses the Telecom Ministry, with trusted Congress leader Kapil Sibal, another lawyer, taking over from Raja. And within days, administrative changes were initiated, including sending show-cause notices to all new operators for allegedly submitting wrong information to bag licences.

Even before the leak of taped conversations that corporate lobbyist Niira Radia had with politicians, bureaucrats, industrialists and journalists, the crisis was building, but it was the tapes that fueled it into a raging fire.

The phone conversations between corporate lobbyist Radia and politicians, particularly Raja, may complicate things further for the former Telecom Minister and the government, which also drew flak for tapping phones.

The controversy even reached the PMO, with the former Telecom Minister claiming that the Prime Minister was aware of all the decisions made.

The 2G spectrum controversy, however, has failed to so far bring the sector to its knees. New subscribers are being added by the millions every month and next generation mobile technology and the countrywide roll-out of new services like mobile number portability are on the anvil.

During 2010, while 2G shook the nation over alleged irregularities in spectrum allocation, 3G took everyone by surprise as the auction of spectrum and wireless broadband frequencies surpassed all expectations, resulting in a whopping revenue of Rs 1.05 lakh crore for the government.

On the 3G front, some operators have already launched services, while others are in the process of doing so. The subscribers will, however, not be able to use video calling facility, one of the main attractions of 3G, till operators put in place technology for real-time monitoring, given the security risk.

Nevertheless, 3G is likely to take telephony to a new level, as operators are promising high-speed mobile broadband and many more additional value-added services on mobile devices. Tariffs for the existing services touched new lows in 2010, with some operators offering half-a-paisa per second call rates to add more and more subscribers to their base.

Even 3G is likely to be a low-tariff affair, despite the massive sums paid by the operators to bag spectrum under the auction. Another user-centric service, MNP, was launched recently, though after missing several deadlines. The service is bound to force the service providers to offer best quality services to retain subscribers. MNP allows subscribers to change service providers while retaining their mobile number.

The service, which is available only in Haryana at present, is likely to become available on a commercial basis across the country from the middle of next month.

Another issue that remained in focus during the year was that of Research In Motion being asked to provide facilities for interception of encrypted data received and sent using its high-end Blackberry handsets for security reasons.