PRABHU DEODHAR was chairman of the Electronics Commission nearly three decades ago. His contribution was to highlight the need for India to focus on IT technologies as the ideal vehicle for speeding up economic growth, and to delicense the consumer electronics sector in 1983 and make it market-driven. He says there is scope for more scams, as in the 2G spectrum case, if we are not watchful.

Excerpts from an interview:

Q. As someone who pioneered the telecom industry under Rajiv Gandhi, what do you feel about the 2G spectrum case? Was it something to do with the first-come-first-served system A. Raja followed as minister? He said that he was only doing what Arun Shourie and Pramod Mahajan had done before him.
A. Let me say that this is a grand scam, one of the biggest to be exposed. But this indeed is not the first one. Mr Raja is right in stating that he just followed an earlier system of allotment. Yet, corruption in telecom is as deep as in every other administrative department of our government — a shameful situation but a reality. Of course, Arun Shourie was not corrupt, but the bureaucrats under him were.

Q. Was there a better way to offer spectrum licences?
A. The open auction to pre-qualified companies was indeed a better way. I am sure that the country would have earned multiple times the licence fee than was realised, besides minimising the chances for corruption.

Q. Mr Raja’s defence is that he adhered to the 2003 prices because it helped to expand the reach of basic mobile services, got in revenue for the government, and brought the rates down. In short, he said it helped him bring about a mobile revolution in the country?
A. The former minister overestimated his strength in Delhi, a rather strange place for migrant politicians from the states. What can Mr Raja do but justify his actions? There is mounting evidence to prove dishonest intentions, as is evident in the CAG report. I am sure that more evidence will surface if investigations are allowed to progress.

Q. Was it right to give licences to people like builders who had no experience of telecom?
A. In today’s money-driven world one can buy anything and anyone. Technologists and technologies are commodities. Look at those who are owning private airlines in the country. They have zero experience and yet they got licences.

Q. What is spectrum? And is it such a big deal? How is it allocated in other countries?
A. That’s a question most people have. The entire wireless telecom and broadcasting service uses airwaves on which their information travels in space. This spectrum of electro-magnetic waves covers what are called radio waves, microwave, infrared, visible, ultra-violet, x-rays etc. A portion of this spectrum, usable for various services by the world, is limited. Therefore, all the countries in the world created a global body called the International Telecommunication Union in Geneva to allocate a portion of this spectrum to various countries. Of the limited spectrum allocated to India, the telecommunications ministry is responsible for giving permission to use this facility. There are many claimants for it within the government, such as the ministries of defence, home and I&B, besides the telecom ministry itself. After the privatisation of telecom services, and especially after the arrival of cellular phones, this limited range of frequency spectrum has become a cash cow for every government in the world.
To get optimum benefits, every government usually auctions the use of these limited range of frequencies by licensing to pre-qualified, eligible, bidders who want to provide such services. So spectrum bidding today is a big deal.
Q. Where do mobile phones come into the picture, involving the interests of lakhs of ordinary consumers?
A. The rapid changes in IT and telecom technologies have enabled the industry to offer extremely useful transfer of voice, data and visuals at very low cost to consumers worldwide. This is done via cellular or mobile phones and huge numbers of innovative gadgets, each using a standard such as GSM. A new generation of cellular standards has appeared approximately every tenth year since 1G systems were introduced in 1982. Each generation is characterised by new frequency bands, higher data rates, and non-backwards compatible transmission technology. Thus came the 2G and now 3G transmission standard. The reality about spectrum usage is getting more complex with each passing day. There are serious issues like backwards compatibility that hurt the consumers. There is 4G in the offing, and WiMAX is another technology marketed as 4G. Unless there is strict discipline, scarcity of anything leads to underhand dealings by those responsible for distribution. Mr Raja has had that privilege.

Q. The CAG has said that Raja did not consult the Telecom Commission. Is this a serious lapse? Is the Telecom Regulatory Auth-ority of India (Trai) now the more significant authority?
A. Mr Raja need not have consulted the Telecom Commission if its constitution is the same as was the case with the Electronics Commission. The EC did not have the powers of the government since I, as its chairman, was not a bureaucrat but someone with the rank of a minister of state. So, my Commission and I were just advisors although the secretaries of electronics, telecom and I&B ministries EC members. When I realised this, I got the Electronics Commission wound up. Being advisor to Rajiv was OK, but being a toothless advisor to the monster of bureaucratic government can be painful. Trai is an empowered body, but really doesn’t know the reality.

Q. Is auctioning of spectrum and bandwidth a better way of dealing with the scarce resource? Won’t this method work against the interest of consumers who will have to pay higher prices as it might be some years before companies winning auction bids recover the large amounts they may pay?
A. In the auction process, the government earns far higher licence fees than otherwise. Licences are auctioned to multiple players who compete for subscribers. Therefore, the price of the service to customers has little to do with the one-time payment of the licence fee. The license fee is indeed a capital investment and not an expense. So, it has limited bearing on profits. Besides, as we all know, a licence itself is a very profitable asset that can be sold at a high price. What Raja gave away was a profitable commodity with a worldwide demand. Those who got the 2G licence would, therefore, be obliged to Mr Raja and his partners in bureaucracy for a long time to come.

Q. Do you think it is fair to compute the loss that Raja allegedly caused the exchequer by pitting the government’s earnings through 2G prices against the 3G prices gained in auction two years later? Or, is the loss just notional?
A. It is difficult to guess what the government might have made had it auctioned the 2G licences. Like the stock market, such prices are speculative, and change with situations. It is however, certain, that our government did lose a lot of money. A fraud is a fraud irrespective of the quantum of money, and the guilty, whoever they may be, need to be punished. My guess — going by the experience of Mr Sukh Ram, Mr Raja will go unhurt even if he is guilty.