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Dear Mr Tata,
It is with considerable concern and some confusion that I have watched your recent television Interviews and press statements following the 2G scam and the exposure of the infamous Nira Radia tapes.I,as countless other Indians,have held the house of Tatas in great esteem and respect have seen them as being different from so many other Indian corporates that play by a different set of rules and values.I,along with many Indians,consider JRD Tata as one of the true builders of modern India.
So,it is with considerable sadness and dismay that I am constrained to write this open letter to you.I trust you will not consider this as personal,since my letter has to do with issues of principle and conduct that are disturbing.In your recent press interactions,you have made the point that the 2G scam needs to be investigated and have made several sub-points,including:
1.Out-of-turn allocation of spectrum;
2.Hoarding of spectrum by incumbent operators;and
3.Flip-flop of policy
Let me wholeheartedly agree with you. Many in media and public life including me,have been saying this for several years now,so your belated realization of these critical issues is very welcome.I sympathize with your concern about public policy making in our country sometimes resembling that of a Banana Republic.But the forces behind this are helped considerably by the fact that people with power and influence remain silent and passive spectators to this.So many including I would have welcomed your intervention much earlier,as in the case of the alleged bribing offer 15 years ago,of Rs 15 cr that you referred to only recently.You will agree that speaking out against corruption is most effective when it is happening and not decades or years later.Because then it becomes an intellectual post mortem,and not active resistance.Since I was previously a telecom entrepreneur,there will be a temptation for those that advise you,to attribute agenda and motivations to this letter of mine.But I assure you that there is none.I write because I believe that there is a need to join you in this debate and necessarily bring to your attention the contradictions between your stand and the position of the Tata telecom companies,that you may be unaware of,given your senior position in your organization.
1.Out-of-turn allocation of spectrum: According to the CAG Report,the potential loss to Exchequer on account of dual technology licenses at 3G rates is Rs 37,154 cr. By virtue of dual technology according to the CAG your company has caused a loss to the exchequer to the tune of approx Rs 19074.8 cr.But it is not just this.It is a fact that the Tata Group is a beneficiary of outof-turn spectrum.In fact,one of the biggest of them all.It is a fact admitted by the Government on affidavit that 575 applications were received for 2G spectrum by October 1,2007.Using an illegal and arbitrary cut-off date, Mr Raja processed only 122 applications received till 25 September,2007.110 were rejected and 343 applications were put in abeyance.Given the fact that there is no 2G spectrum available,these applications received till October 1,2007 (within the date represented by the Government) have now been put in the dustbin.In fact,the TRAI had already recommended on May 11,2010 that no more UASL license with bundled spectrum can be given.This means that these 343 applications will never be processed and will never see spectrum.In the meantime,19 days after these 575 applications were received,the dual technology policy was announced through a press release by Mr Raja.The Tatas put in their dual technology applications around October 22.So,in effect,their application went in three weeks after the 575 2G applications were received.Today,Tatas already have GSM spectrum allocated and GSM service launched in most of the circles.But the 343 applications submitted three weeks before the Tata Group have neither been processed nor have any chance of ever being processed so much for First Come,First Serve.
You will accept that this seems to be a case of arriving late,forming a new queue,jumping the priority and accusing others of getting priority on spectrum allocation and meets your point of out-ofturn allocation of spectrum.I am sure the 373 applicants who were rejected for no fault of theirs,will agree while the Tata Group has sold its equity for billions of dollars to NTT DoCoMo based on its out-of-turn GSM allocation on dual technology policy.In my humble opinion,evidence suggests that the Tatas have benefited from out-of-turn spectrum allocation.The dispute between Tatas and Reliance Comm inter se on the allocation sequence cannot dilute the primary fact of bypassing other early applicants to this spectrum.
2.Hoarding of spectrum by incumbent operators: This is an important point you have raised.I concur with you that there is a need for telcos,old or new,to pay market rates for spectrum.I also completely agree that the subscriber-linked criteria allocation of spectrum is flawed and is encouraging fudging and false subscriber numbers.But I bring to your attention,that this is existing Government policy flawed or unfortunate as it may be,and the only solution to this is to replace this with a new policy.If by hoarding, you mean having more spectrum than number of subscribers that can be serviced then please note that Tata holds spectrum both for GSM and CDMA.Based on the spectrum that Tata has, its average efficiency is perhaps the lowest amongst the large operators.Equally,that the CDMA spectrum that Tata holds is 3-4 times more efficient than the GSM operators by its own admission,which I recall during the WLL scam.Moreover,Tata has received CDMA and GSM spectrum at 2001 rates.So even if the hoarding charge was to apply,it would also apply to the Tatas for having maximum cumulative efficiency (CDMA and GSM) to serve the least number of subscribers amongst the incumbents.Again,I fully support the need to price spectrum beyond 6.2 MHz with incumbent operators at market rates.But the charge of hoarding that you make applies equally to Tata Tele whether it is total spectrum held,or subscribers served based on that spectrum,or price paid to acquire such spectrum,vis--vis the cumulative efficiency of CDMA and GSM.
3.Flip-flop of policy: In your interview,you have pointed out that a lot of the current dysfunctionality in telecom has arisen from policy changes and flipflops.You would recall that one of the most horrific distortions of policy was the infamous WLL scam in 2001 where telecom companies with fixed service licenses managed to muscle their way into cellular with active support of policy makers of that time and not to forget that it was all done in the name of benefit to the common man! You will further recall that in 2003,a convenient set of recommendations by the TRAI and Government allowed this illegality to be regularized through the UASL policy,opening the gates to unprecedented and unique (and unheard of) First Come,First Served form of licensing bypassing tenders (a form of auction) that were the norm for obtaining cellular licenses till then.Your company was the beneficiary of this policy flip-flop and you chose to accept the benefits of this flip-flop at that time despite this blatant violation and distortion.I am personally aware because I led the fight against it and remember being immensely disappointed at the Tata Groups remarkably selfserving position.Further,in one of the most mysterious and indefensible acts,Tata Group took on board as a consultant,the very individual,who as the chairman of TRAI was the architect of this UASL and other shames.
Respectfully,
RAJEEV CHANDRASEKHAR
Member of Parliament
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December 8,2010 - Certain powerful politically-connected operators have subverted policy,and have de facto ownership in several new telecom firms.
Dear Rajeev
Iam currently overseas and have just seen a copy of the open letter you have addressed to me with copies to the entire media community.This is of course in keeping with the current trend of attempted character assassination through widespread media publicity couched in pain and concern for upholding ethics and values.Your letter is based on untruths and distortion of facts and it is essential that I place the real facts,as bluntly as possible before you.I hope this will also be broadly disseminated to the same audience as your letter.I am of course well aware that some media houses will choose not to publish or air my response in deference of their owners,who are the real gainers in the telecom sector,with whom you have unfortunately aligned to provide a massive diversion of attention away from the real culprits in the telecom space.You will appreciate that the Governments stated telecom policy of 1999 set out the principles of a technology neutral environment.When cellular mobile telephony was introduced,the first set of operators including yourself,chose GSM,the broadly used European technology at that time.The first set of cellular mobile operators received their licenses based on an auction process in circles for which some of them and their partners submitted very high bids.Later in July 1999,in a BJP-led NDA Government,in accordance with the recommendation of a Group of Ministers headed by Mr Jaswant Singh,the fixed license fee regime was changed to a revenue share regime (which exists even today).If a hypothetical amount was to be calculated similar to one that has been done in the CAG report,at that point of time,the loss to the exchequer would be about Rs.50,000 cr and the exchequer would have been deprived of this amount.Realistically,however,the revenue share system would have recouped some amount over time and this important change most probably has been responsible for the greater growth of the industry as it enabled tariffs to be reduced.
CDMA technology (a newer and more efficient technology),was utilized by some operators for fixed wireless operations such as PCOs and for last mile wireless connectivity for fixed line phones.The first attempted deviation from stated policy was in January 2001 when the then telecom minister,Mr Ram Vilas Paswan,in a BJP-led Government,sought to allow the fixed wireless application of CDMA for limited mobility on the grounds that it would be available to the public at a lower price.The GSM operators led by you mounted a campaign lobbying against this on the grounds that it would be unfair to the incumbents who had made investments and who had enjoyed first mover advantage.
You will recall that you and Nusli Wadia approached me in the Chambers in Taj Mumbai in July 2002 to sign an appeal to the then Prime Minister,Mr A B Vajpayee,Deputy Prime Minister,Mr Advani and Finance Minister Mr Jaswant Singh not to allow fixed mobile service providers to provide mobile services.I enclose a copy of your fax dated July 12,2002,requesting me to sign and the draft letter which I was supposed to sign.In para 2 of this letter your objective amongst other things was to reach a 50 million subscriber base by 2006.To refresh your memory,I enclose a copy of the letter dated August 16,2002,that I wrote to you expressing my inability to sign such a letter as it would block the introduction of CDMA technology and I believed that the telecom industry needed to be technology neutral but what I agreed with you was that any new operator should pay the same fee as the incumbents so that all operators were equalized and that no one was disadvantaged.As a result of a technology agnostic policy we achieved more than 100 million subscribers in 2006 and to date 700 million.I am also enclosing a copy of my letter to Mr Vajpayee dated January 12,2001,in which I advocated an open,transparent process giving all parties a chance to be heard a stance that I have not changed till date.This has angered you and the other operators who were not interested in a level playing field and lobbied aggressively through COAI to ensure that a technologically agnostic environment would not come to pass.It is obvious that an industry driven by technology cannot confine itself to a single technology only because that was the technology employed by a handful of operators who derived early mover advantage,enjoyed high ARPUs and in fact thwarted new admittedly more efficient technology like CDMA.China,Korea and even the US have built their large subscriber numbers on the utilization of both CDMA and GSM technology.Growth could have been far greater had incumbent operators like yourself risen above their self interest of protecting their investment and allowing the existence of all technologies on an equal footing.
However,in pursuance of the spirit of NTP 1999,the Government did indeed implement the technology neutral policy in November 2003.The minister involved was Mr Arun Shourie in the same BJP-led NDA government.This was implemented through the creation of the UASL (unified access service licence) regime which enabled existing license holders to migrate to UASL license providing freedom of choice of technology and where a pan-India license could be obtained for a fee of about Rs 1,650 cr,the same fee paid by the successful fourth cellular mobile operator.Mr Shourie needs to be commended in implementing this far sighted policy,which has enabled technology to be the driver of the industry,rather than technology protected growth.
I will now briefly touch on the points you raised regarding TTSL (Tata Tele Services Ltd) and the alleged advantage they gained.I have requested TTSL to address those issues in greater detail to you directly. On the issue of various allegations you have made on the so called benefits gained by TTSL,so called out-of-turn allotment that you claim have been given by DoT,you have chosen to misrepresent the facts as they suit you to justify the claims you have made.The true position is that TTSL has not I repeat not been advantaged in any way by Mr Raja or any earlier minister.The company has strictly followed the applicable policy and has been severely disadvantaged,as you are well aware,by certain powerful politically connected operators who have willfully subverted policy under various telecom ministers which have subsequently been regularized to their advantage.
The same operators continue to subvert policy;and have even paid fees for spectrum,even before the announcement of a policy,and have de-facto ownership in several new telecom enterprises.Licenses were granted to several ineligible applicants.Several licensees have spectrum in excess of their entitlement as per license conditions and not on the self styled capacity spectrum efficiency that you have chosen to mention.This is the smoke screen that I am referring to as these subverters of government policy continue to do so to their advantage and their acts are being ignored or condoned.TTSL,on the other hand,as an existing licensee,applied for spectrum under the dual technology policy after the policy was announced on October 19,2007 and is still awaiting allotment of spectrum in Delhi and 39 key districts for about three years whereas operators who applied and paid the fee even before the policy announcement were not only considered ahead in line but were allotted spectrum with amazing alacrity in January 2008 itself.I am surprised that you have chosen to sidestep this very important aspect.
The investment by NTT DoCoMo in TTSL was not based on a zero base valuation,like others,but was based on the performance of the company with 38 million subscribers,pan-India presence of network,offices,channel,turnover of Rs.6000 cr,60000 km of fiber;and the potential growth of the company.The valuations are on the basis of a due diligence and service evaluation of the companys service quality by DoCoMo.
On the question of hoarding of spectrum which I have referred,you will no doubt remember that in 2005 I made an issue of the fact that spectrum was a scarce resource and needed to be paid for rather than given free as was being proposed.The government policy entitled operators no more than 6.2 MHz on the basis of their license conditions.All additional spectrum should have been returned or paid for.Even TRAI has recommended this in July 2010.I believe that TTSL was the only operator that returned spectrum when demanded by DoT.The CAG report clearly indicates which of the powerful GSM operators are holding spectrum beyond their entitlement free of cost and to the detriment of the other operators. On the question of many disadvantaged new applicants who have supposedly been denied licenses in 2007,you are well aware that many of the applicants were proxy shareholders in high places,and were applying to entering the sector with a view to monetize the license once received.Even those that were granted license and spectrum have failed to effect any meaningful rollout of services. Strangely,you have chosen to ignore this fact and singled out TTSL who have,in fact,put in place a network supporting 82 million subscribers,despite the fact that they have been deprived of spectrum in Delhi and the 39 key districts over the past 3 years as mentioned earlier.How could you or anybody possibly consider this to be a beneficial situation for TTSL
You parked yourself at the Taj Mahal Hotel Delhi for several months since 2002 which was the centre of operations for you to prevent entry of WLL Limited Mobility and CDMA as well as to interact with the polity and bureaucracy and with other operators to forge telecom policy of your choice.You did this in your own capacity as also as President of COAI (Cell Operators Association of India). You also constantly solicited support of CII.Would you not consider this as endeavour to influence or subvert policy To influence politicians or solicit support from selected corporates I take it that in your view this would not constitute lobbying.
Your affiliation with a particular political party is well known and it appears that their political aspirations and their endeavour to embarrass the Prime Minister and the ruling party may well have been the motivation behind your letter and the insinuations which you make.We should all note that many of the flip flops in the telecom policy occurred during the BJP regime.Whatever may be said,it must be recognized that the recent policy broke the powerful cartel which had been holding back competition and delaying implementation of policies not to their liking,such as growth of CDMA technologies,new GSM entrants,revision in subscriber based spectrum allocation norms,and now even number portability.You yourself have publically commended in November 2007 such initiatives and the minister for breaking the cartel and reducing the cost of service to the customer.
The 2G scam ostensibly revolved around Mr Rajas alleged misdeeds and some parts of the CAG report were quoted as having indicted the minister.Much has been made about the hypothetical loss to the exchequer in the grant of new licenses and spectrum on the basis of 3G auction prices,(which were not known or even foreseen at the time of granting such licenses and spectrum ).However,the media and even you have chosen to ignore the rest of the CAG report in which excess possession of spectrum,the disadvantages to TTSL by name,the irregularity in allotment of licenses to most players whose applications were ineligible to be considered in the first place have been mentioned in great detail.You have also not noticed that CAG has not ascribed value to 48 new GSM licenses issued to incumbents during this period even though the CAG was supposed to cover the period from 2003.I would have thought that all this would have been of public interest and should have been widely reported.I have welcomed the ongoing investigations and sought that the period of investigation be extended to 2001 for the nation to know the real beneficiaries of the ad hoc policy-making and implementation.
Finally,you have chosen to lecture me on the responsibilities of upholding the ethics and values which the Tata Group has honored and adhered to through the years.I can say categorically that we have not wavered in upholding our values and ethical standards despite the erosion in the ethical fabric in the country and despite the efforts of others to draw us into controversy and endeavour to besmirch our record.When the present sensational smokescreen dies down,as it will,and the true facts emerge,it will be for the people of India to determine who are the culprits that enjoy the political patronage and protection and who actually subvert policy and who have dual standards.I can hold my head high and say that neither Tata Group or I have at any time been involved in any of these misdeeds.
The selective reporting and your own selective focus appear to be diversionary actions to deflect attention away from the real issue,which plagues the telecom industry,in the interest of a few powerful politically connected operators.Perhaps it is time that you and members of the media do some introspection and soul searching as to whether you have been serving your masters or serving the general public at large.
Warm regards,
Yours sincerely
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December 9,2010-Your letter is exceptionally weak
Dear Mr Tata,
I welcome your joining this debate.It is an impor tant one and needs to be settled in full public view Unfortunately,your response is a typical one that ducks the main issues and instead attempts to shoot the messenger! I am only disappointed,but no longer surprised,that in sharp contrast to my efforts to go out of the way to keep this debate relating to facts and policy discus sions your letter is intensely personal,attributes fee ble motives (including amusing political ones) and most unbecoming of the House of Tatas.I can only think that this is a lapse in good judgment.I particu larly find your self-appointed defence of the Prime Minister and Government very irrelevant.
Nevertheless,I promise to keep my response dig nified and steadfastly refuse to fall to your level of per sonal attacks.On facts,your letter is not just excep tionally weak,but in fact,refuses to engage on the is sues that I had raised the yawning gap between what you say in public and what your companies do.While those remain unanswered,I will certainly reply short ly with my response.I promise to rebut your allega tions,claims and innuendo chapter and verse in the public domain.
Best regards
RAJEEV CHANDRASEKHAR
Member of Parliament
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(SOURCE-TOI)
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