One question always comes in my mind is "what is the impact of 2G SCAM on us, as a common Indian citizen"? The quest became intense after watching another
program on NDTV.
When I look back I see that Local and STD call charges had dropped significantly in India in few decades.
Here is a
graph which compares the price from 1999 till 2006 and reveals that mobiles call rates have fallen from Rs 14.0/Minute in 1996-97 to Rs 0.5/Minute.
What is 2G scam?
Wiki: "The 2G spectrum scam involved politicians and government officials in India illegally undercharging mobile telephony companies for frequency allocation licenses, which they would then use to create 2G subscriptions for cell phones. The shortfall between the money collected and the money which the law mandated to be collected is estimated to be 176,645 crore (US$32.15 billion), as valued by the Comptroller and Auditor General of India based on 3G and BWA spectrum auction prices in 2010."
What actually happened?
Wiki: "In November 2007 Prime Minister of India Dr Manmohan Singh had written a letter to telecom minister A. Raja directing him to ensure allotment of 2G spectrum in a fair and transparent manner and to ensure license fee was properly revised. Raja wrote back to the Prime Minister rejecting many of his recommendations. In the same month Ministry of Finance wrote a letter to Department of Telecommunications (DOT) raising concerns over the procedure adopted by it but DOT went ahead with its plan of giving 2G licenses. It preponed the cut-off date to 25 September, from 1 October 2007. Later on the same day, DoT posted an announcement on its website saying those who apply between 3.30 and 4.30 pm on that very day would be issued licences in accordance with the said policy."
What is the impact on us?
In 2007 if 2G spectrum would have been auctioned, I am not sure whether Government of India would have got 176,645 crore or not. But I am sure about one thing. If telecom providers would have paid 176,645 crore, they must have passed this burden to us. The mobile phone call cost would have been increased just like everything including petrol prices mentioned below.
Some time back I was overwhelmed when I saw a rickshaw puller in remote village talking on his mobile phone. Even poorest people who cannot afford food for two times a day, can afford mobile. Buy a phone for few hundreds, charge for few rupees and stay connected for months as the incoming calls are free and missed call doesn't cost anything. The call rates is still 50 paisa per minute or even lower.
Evolution in mobile technology, cheap mobile phones and cheaper call rates has empowered citizen of India to communicate 24 X 7.
Hence I think that, not auctioning the 2G spectrum was not the real scam. It was good for us.
Why Swan and Unitech?
Wiki: "Companies like Unitech & Swan Telecom got licenses without any prior telecom experience. Swan Telecom got the license even though it did not meet eligibility criteria. Swan got license for 1,537 crore (US$279.73 million) and then it sold 45% stake to UAE based company Etisalat for 4,200 crore (US$764.4 million). Unitech Wireless, a subsidiary of the Unitech Group, got license for 1,661 crore (US$302.3 million) and later sold 60% stake for 6,200 crore (US$1.13 billion) to Norway based company Telenor."
Why license awarded to least known Swan and Unitech? Why existing players like BSNL/MTNL or Bharti/Airtel or Hutch/Vodafone were sidelines?
I ask myself what if the existing players would have got the license by paying few thousand crores? They might have started increasing the call rates by complaining about this license price and increasing inflation. When the license was given to the unknown players, this increased the competition. The new providers tried to build their customer base and existing providers continued to protect their market share. Hence price remained lower and worked in favour of the us.
Then what was the real scam?
Govt of India got only 1,537 crore from Swan who immediately made 4,200 crore. Govt of India got only 1,661 crore from Unitech who quickly made 6,200 crore.
This quick and easy money made by Unitech and Swan by selling stakes to foreign multi-nationals was the real scam.
The 176,645 crore scam sound more political to me and overstressed, just too much.
However strict rules should be made to avoid the brokers like Swan and Unitech. And the offenders must be punished.
