Performance
Communication and IT

Report No. 19 of 2010 - Performance Audit of Issue of Licences and Allocation of 2G Spectrum of Union Government, Ministry of Communications and Information Technology

Date on which Report Tabled:
Tue 16 Nov, 2010
Date of sending the report to Government
Government Type
Union
Union Department
Communication and IT
Sector Information and Communication

Overview

In the last two decades the telecom sector witnessed rapid transformation with the National Telecom Policy-94 setting the stage for opening up of the sector. With changes in the sector, cellular mobile services outgrew the fixed line services. The most important change was the shift to a revenue sharing regime in National Telecom Policy (NTP) 1999 where the operators shared their revenue with the Government in the form of annual licence fee and spectrum charges. The Unified Access Services Licence (UASL) 2003 sought to frame the road map for a uniform licencing regime.

This sector has witnessed dynamic and rapid transition. It had been subject to audit and a report titled "Package of Concessions Given to Cellular Mobile Operators" was presented to Parliament in May 2000. A further review of the "Revenue Management in the Department of Telecommunications" was also undertaken by this office in 2004-05. This review mainly focused on the system of collection and accounting of licence fee and spectrum charges from the licensees. The Report based on this review was presented to Parliament in May 2006.

In January 2008, Department of Telecommunications issued 120 new licences for unified access services on the same day. These licences were issued at price which had been discovered in 2001. Issuance of 120 licences in just one day and at a price discovered in 2001 has drawn the attention of Media, Parliament and informed members of the civil society. Questions have been raised regarding the transparency in the allocation process and the failure in maximization of revenue generation from the allocation of spectrum, which is a national asset. This department had been receiving innumerable references from Members of Parliament and other sources repeatedly, questioningthe allocation processandthe price fixed for such allocation. The claim in each such reference is that ineligible applicants seem to have been granted licences and at a price which appeared far below what has been perceived to be the appropriate market price in 2008. It was in this context that this department felt that there was a sufficient justification to review the entire process of issuance of licences, award of spectrum and the implementation of the UAS regime. The need fordoing so was further justified as six years have passed since the introduction of the UAS regime in 2003. While accepting the Government's prerogative to formulatethe policy of UASL, it wasfeltthatan in-depth examination of implementation of such policy needed to be done.

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