It is significant that the Union government has backed Elon Musk’s internet arm Starlink and Amazon over Mukesh Ambani Reliance and Sunil Mittal’s Airtel by deciding to allot satellite spectrum administratively rather than take the auction route.
The decision is a tacit admission the ‘2G scam’ over a decade ago was a red herring, and the ‘presumptive loss’ of Rs 1.76 lakh crore alleged by CAG for not auctioning spectrum was at best creative imagination.
For the current broadband satellite spectrum, Musk had lobbied hard against the Ambani bid to keep to auctions. In a post on X late on October 14, Musk said any decision to auction “would be unprecedented.”
Citing the international practice endorsed by the International Telecommunication Union (ITU), Musk added: “This spectrum was long designated by the ITU as shared spectrum for satellites.”
Hours later, the government plumed for Musk’s position. Union communications minister Jyotiraditya Scindia said on October 15 that spectrum “will be allocated administratively in line with Indian laws.”
The pricing would be worked out by the telecom watchdog, he added.
Competition helps
The turf war between our local billionaires, Mukesh Ambani and Sunil Bharti Mittal, on one side, and Elon Musk’s Starlink has been on for some time. Starlink has said allotting licences is in line with a global trend and is justified since spectrum is a natural resource to be shared. An auction may impose geographical restrictions that will raise costs for the consumer.
Reliance, on the other hand, in submissions to the government, has called for the auction of spectrum as foreign satellite operators had the advantage of bundling additional services like voice and data.
Therefore, auction was one way of achieving a level playing field. What the Ambanis are not saying publicly is that they already have the first mover advantage of 440 million telecom users and 8 million wired broadband connections, representing a 25 percent market share. By excluding foreign players like Starlink, Reliance and Airtel want to further consolidate their monopoly over digital communication.
The government has done the right thing by keeping the door open to competition. Satellite broadband services are moving fast. Management consultancy Deloitte expects the sector to be worth $1.9 billion by 2030. It’s ability to reach remote areas will be a boon to integrating rural India with the internet highway.
Though the final set of players are yet to be decided, hopefully there will be many, including Amazon’s Project Kuiper, which will launch its satellites in 2025, and the British government-backed OneWeb. This will ensure competition on tariffs and make broadband prices more affordable.
Was there a scam?
The decision of the government to go with administrative allotment of satellite spectrum is an admission that the brouhaha over a decade ago over the allotment of 2G telecom circles was misplaced.
Vinod Rai, the then Comptroller and Auditor General of India (CAG), arrived at the explosive conclusion that the then UPA government, by not conducting auctions for the telecom circles in 2007, had caused a humungous loss of Rs 1.76 lakh crore.
The presumptions in CAG’s math was based on rates at which 3G telecom spectrum was auctioned two years later. It was then pointed out that the sale of 3G and 2G spectrum was not comparable, as 3G was not for mass communication but for commercial use.
No one bothered about the details. Everyone loves a good scam. The Congress-led UPA, then telecom minister A Raja and dozens of suspect telecom operators were hung out to dry.
Kapil Sibal, who took over as Union minister for Communications & IT in 2011, was mocked for this ‘zero-loss’ calculations. It was good election ammunition too, and the BJP romped home in the 2014 Lok Sabha polls. There was guarded admission from the UPA government that there were irregularities and the possibility of bribe-taking in the allotment of 2G licences. Sibal promised a clean-up, but he steadfastly defended allotments on ‘administrative’ basis.
Debunking the presumptive loss of Rs 1.76 lakh, Sibal said: “Government policy is formulated with a view to maximise public welfare and not merely to maximise government revenues. The pricing of different natural resources is often done in a manner that meets this objective. For instance, land is given free of cost to infrastructure projects such as construction of highways…The average (mobile) tariff came down from almost Rs 17 per minute in 1999 to about Rs 3 per minute in 2004, and, by March 2010, this became as low as 57 paise per minute, while today (January 2011) it has reached a level of 30 paise per minute.”
The vindication of this stand is in the numbers. As of early 2024, India had 1.12 billion active cellular mobile connections, which is 78% of the country’s population.
A few months ago and 10 years after the CAG report, Duvvuri Subbarao, a former Union Finance Secretary and RBI governor, said in a newspaper interview the assumptions underlying CAG’s estimate of Rs 1.76 lakh crore presumptive loss in the 2G telecom scam are contestable.
“CAG didn’t reckon with the significant spin-off benefits of low spectrum pricing,” he said.
And now with the BJP-led government accepting satellite broadband spectrum allotment via ‘administrative’ pricing rather than auction, the debate has turned a full circle.
Broadband internet, like telecommunications, is a public service wherein consumer welfare must prevail over seeking high revenue for the government and big corporates.