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CAG blames telcos' cartelisation behind flop spectrum auction

CAG blames telcos' cartelisation behind flop spectrum auction

By Press Trust Of India | Updated: 29 May 2013 15:02 IST

The Comptroller and Auditor General is learnt to have blamed cartelisation by telecom players behind the failure of recent spectrum auction and pointed finger at the conduct of Airtel, Vodafone, RCom, Idea and Tata Teleservices in this regard.

"Many of the leading operators, who were constantly demanding spectrum for meeting QoS (Quality of Service) parameters of TRAI, appeared to form a cartel and declined to take part in the auction in 2012/3," CAG is learned to have communicated to the Telecom Ministry seeking its comments in a draft report.

CAG had earlier calculated that the spectrum allocation to the companies without auction in 2008 caused government presumptive loss of Rs. 1,76,000 crore.

In 2012, there was muted response from the industry to bidding for spectrum that was freed from cancellation of 122 licences. The auction fetched the government about Rs. 9,407 crore out of Rs. 28,000 crore expected, as per the minimum price fixed for the spectrum.

The CAG added that declining to participate in auction negated their telecom operators position of seeking additional spectrum.

"If additional spectrum was vital for maintaining TRAI prescribed QoS, then reluctance of the operators to take spectrum at price in the last two auction appeared to be a significant departure from their earlier stand," CAG said.

The auditor's communication raised finger at leading operators who had been requesting for additional spectrum.

No comments were received from the companies named in the report.

CAG said Bharti Airtel had filed 68 applications for additional spectrum for 21 service areas from 2008-11 but made token participation in the auction held in November 2012.

Airtel bought only one slot of spectrum worth Rs. 8.67 crore in Assam service area.

The auditor said Idea had been repeatedly requesting for additional spectrum since February 2009 in Mumbai when their subscriber base was hardly 6 lakh to overcome call congestion, call drop and voice quality.

"In spite of all the problems, Idea didn't participate in the auction for the Mumbai service area in the recent auctions," CAG said.

Idea Cellular had participated in the auction and won airwaves in 8 services areas for Rs. 2,031 crore in November.

CAG said Vodafone was allocated 10 Mhz of spectrum till July 2003 in Delhi when its customer base was just 7.91 lakh.

After this allocation, the company has been requesting for more spectrum to deliver services as per quality standard prescribed by TRAI.

"It was evident that the company was able to cater 58.77 lakh customers as of August 31, 2010 with 10 Mhz 2G spectrum allotted till July 2003. Incidentally, Vodafone Essar did not participate in the spectrum auction for Delhi service area when the department held the auction of 2G spectrum in November 2012 and March 2013," CAG said.

It added that Vodafone was providing mobile services to 84.6 lakh subscribers in Delhi which is "almost three times of the subscriber base criteria set by the department for 10 Mhz of spectrum."

Similarly, the auditor questioned Vodafone's move of not bidding for airwaves in Mumbai circle where its subscriber swelled two times by January 2013 to the subscriber base criteria prescribed by DoT for 2G spectrum held by it in the service area. Vodafone won spectrum in 14 circles, maximum by a player, in 2012 auction.

CAG raised finger at Reliance Communications saying that it had approached DoT for additional spectrum in 12 service areas through 37 applications from 2008-11, but did not participate in auction.

The auditor also named Tata Teleservices which had been requesting for additional spectrum but did not participate in the auction for Karnataka service area where it has seven times more subscribers than the prescribed limit.

CAG said that the move by telecom operators not to participate in the auction to meet their needs may have led them to compromise on the QoS, inaccurate data submission to TRAI, inferior quality of work by agencies selected by TRAI for conducting surveys. Operators may be reporting inflated subscriber numbers.

CAG has further blamed DoT for not providing incentives to ensure efficient or effective utilisation of the available spectrum which has lead to customers suffering from the poor quality of service and the government being deprived of huge revenues.

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