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2G spectrum scam

The 2G spectrum scam in India involved the issue of 1232 licenses by the ruling Congress-led UPA alliance[1] of the 2G spectrum to 85 companies[1] including many new telecom companies with little or no experience in the telecom sector at a price set in the year 2001. The scam involved allegations regarding

the under pricing of the 2G spectrum by the Department of Telecommunications which the illegal manipulation of the spectrum allocation process to favour select companies

resulted in a heavy loss to the exchequer, and

The issue came to light after the auction of airwaves for 3G services which amounted to 67,719 crore (US$15.1 billion) to the exchequer.[2] A report submitted by the Comptroller and Auditor Generalbased on the money collected from 3G licenses estimated that the loss to the exchequer due to under pricing of the 2G spectrum was 176,379 crore (US$39.33 billion).[3] The scam came to public notice when the Supreme Court of India took Subramaniam Swamy's complaints on record [With Case type:Writ Petition (Civil),Case No:10, Year:2011].[4]

[edit]Civil

Servants, Politicians and Corporations Involved in scam

All the accused have been booked under sections 120(B) (criminal conspiracy), 468 (Forgery for purpose of cheating), 471 (using as genuine a forged document or electronic record), 420 (cheating and dishonestly inducing delivery of property) and 109 (abetment if the act abetted is committed in consequence, and where no express provision is made for its punishment) of the Indian Penal Code.[5] [edit]Politicians,

Ministers and Parliamentarians involved

Andimuthu Raja, Union Cabinet Minister for Communications and Information

Technology : The Comptroller and Auditor General holds Raja personally responsible for the sale of 2G spectrum at 2001 rates in 2008, resulting in the previously mentioned loss of up to Rs. 1.76 lakh crores (US$40 billion) to the national exchequer.[6] In August, 2010, evidence was submitted by the Comptroller and Auditor General (CAG) showing that Raja had personally signed and approved the majority of the questionable allocations.[7]

M. K. Kanimozhi, Member of Rajya Sabha : On April 25, 2011 Kanimozhi was named as

a co-conspirator in the supplementary chargesheet filed by the Central Bureau of

Investigation (CBI) in connection with the 2G spectrum case. The chargesheet submitted before the Supreme Court establishes how Rs 200 crore connected with the scam traveled from a partnership firm of businessman Shahid Balwa of Swan Telecom to the Karunanidhi family-owned Kalaignar TV.[5] She has been charged with section 7 and 11 of the Prevention of Corruption Act. The sections deal with acceptance of alleged gratification.[8] [edit]Bureaucrats

involved

Siddhartha Behura, Civil Servant (IAS officer of 1973 batch UP cadre) : He was the Pradip Baijal, Civil Servant (IAS officer of 1966 batch MP cadre) : He is alleged to have

Telecom secretary who served in the DOT at the time of the 2G allocation.

recommended policies that favored certain Telecom companies when he was heading the TRAI. Post retirement, Baijal joined Noesis, a consulting firm.[9][10] Raja has made references to Baijal's decisions in 2003 as the basis for his decisions in 2008; something which has been attacked by Arun Shourie and several media pundits. The houses and offices of the bureaucrat were visited by the Central Bureau of Investigation in December 2010 as part of their investigations.[11] However, Baijal is expected to get a clean chit in this issue [12]

R K Chandolia, Civil Servant (IES officer of 1984 batch cadre) : He was private secretary

of Raja during UPA-I when the licences were awarded. When Raja became the Telecom Minister once again in UPA-II, Chandolia had been promoted to the Joint Secretary rank. Raja re-designated him Economic Adviser, that gave him the charge of all important policyrelated work. Chandolia interacted with all the licensees. It is said that it was Chandolia who, from DDG-access services A K Srivastava's room, had handed out letters of intent to representatives of various companies.[13] [edit]Corporations

involved

Allianz Infra[14] Aircel Dishnet Wireless Loop Mobile Sistema Shyam Mobile (MTS) Sistema Mobile Russia Reliance Communications S Tel Swan Telecom Tata Tele Services

Unitech Group Videocon Telecommunications Limited Vodafone Essar Virgin Mobile India airtel

[edit]Corporate

personalities involved

Anil Ambani - Reliance Group (ADAG)[15] Ratan Tata Shahid Balwa - Swan Telecom (now Etisalat DB) Vinod Goenka - Swan Telecom (now Etisalat DB) Venugopal Dhoot - Videocon Group Prashant Ruia - Essar Group Sanjay Chandra, Managing Director of Unitech Ltd and Unitech Wireless

All of them have either been questioned by the CBI or are prospective suspects in the scam. [edit]Media

persons and lobbyists involved

Nira Radia, a former airline entrepreneur turned corporate lobbyist whose conversations

with politicians and corporate entities were recorded by the government authorities. The contents were later leaked by unknown parties creating the Nira Radia tapes controversy

Barkha Dutt, a journalist who works with NDTV also was involved in the lobbying of

ministers in the government, but was not given any coverage or publicity in this matter by her fellow colleagues. [edit]Politicians,

Ministers and Parlimentarians involved

Dayanidhi Maran, former Union Cabinet Minister for Textiles : The main allegation

revealed by Tehelka magazine and followed up in several other reports, is that Maran forced C Sivasankaran, owner of Aircel, to sell the telecom company to Maran's Malaysiabased friend T Ananda Krishnan in 2006. The reports allege that Maran deliberately delayed issuing spectrum licenses to Aircel's sister concern, Dishnet Wireless, when it was owned by Sivasankaran. He issued the licenses soon after it changed hands to Ananda Krishnan who owns Maxis.[16]

P. Chidambaram, current Union Cabinet Minister for Home Affairs : Subramaniam

Swamy states that when the 2G Spectrum rate was finalised, P.Chidambaram was the finance minister of India and he had a major role in deciding the spectrum price with A.Raja. Subramaniam alleges that Chidambaram had received kickbacks and undervalued the spectrum cost.[17] [edit]Petitioners

to 2g scam

Subramaniam Swamy, activist lawyer and politician, whose letters to the Prime Minister

demanding action and affidavits and cases in the Supreme Court brought the issue into the public limelight.

Paranjoy Guha Thakurta, a journalist who was one among the very first to write on the

irregularities in the awarding of 2G spectrum allocation by the Telecom Ministry. He is also one of the petitioners in the 2G PIL currently being heard in the Supreme court.[18]

Prashant Bhushan, on behalf of the Centre for Public Interest Litigation. Anil Kumar, on behalf of the civil society organisationTelecom Watchdog Others:Several eminent people like former chief election commissioners J.M.

Lyngdoh, T.S. Krishnamurthy and N. Gopalaswami and former central vigilance commissioner (CVC) P. Shankar are also petitioners in the suits filed by civil society groups.
[14]

[edit]Loss

to Exchequer

The Controller and Auditor General of India used three different methods to assess the presumptive loss to the exchequer resulting from not auctioning 2G spectrum.[19] The first method was based on the fact that S Tel, one of the licensees, explicitly offered to pay significantly higher license fees for the spectrum. Based on the fees offered by S Tel, the CAG estimated the loss to the exchequer at 67,364 crore (US$15.02 billion) The second method was based on the price recovered by the 3G auction in 2010. The CAG reasoned that since 2G is really 2.75G (EDGE), its price should be comparable to that of 3G licenses. Based on this method, the CAG estimated the loss to the exchequer to be 176,000 crore (US$39.25 billion) The third method was based on the fact that some of the licensees received FDI in the form of equity, shortly after the spectrum allocation. The CAG reasoned that this equity infusion was entirely due to the value of the allocated spectrum; this can be construed as re-sale of the

spectrum by the licensee, and hence was a valid basis for assessing loss to the exchequer. Based on this method, theCAG estimated the loss to the exchequer to be anywhere between 57,666 crore (US$12.86 billion) (based on Etisalat's investment in Swan Telecom) and 69,626 crore (US$15.53 billion) (based onTelenor's investment in Unitech). For its part, the Congress-party led government has publicly defended itself on this count and Kapil Sibal, who replaced A. Raja as the communication minister, has refuted the CAG reasoning.[20] He has also justified his government's decision not to auction 2G spectrum as being in line with the policy guidelines laid down by the 10th Five-Year Plan.[21][22] [edit]Relationship

between media and government

Main article: Nira Radia tapes controversy Media sources such as OPEN and Outlook reported that Barkha Dutt and Vir Sanghvi knew that corporate lobbyist Nira Radia was influencing the decisions of A. Raja.[23] The critics alleged that Dutt and Sanghvi knew about corruption between the government and the media industry, supported this corrupt activity, and suppressed news reporting the discovery of the corruption.[23] [edit]Ratan

Tata petitions over leak

The tapes leaked to the public include conversations between Nira Radia and Ratan Tata. Tata petitioned the government to acknowledge his right to privacy and demanded accountability for the leak, with the Minister for Home Affairs, CBI, Indian Income Tax Department, the Department of Telecommunication, and the Department of Information Technology as respondents in the petition.[24] On April 4, 2011 Indian Parliament's Public Accounts Committee (PAC)questioned Tata Sons Chairman Ratan Tata and corporate lobbyist Niira Radia regarding their roles in 2G Scam.[25] [edit]Response

to scam

In early November 2010 Telecom Minister A Raja resigned. In mid November the controller Vinod Rai issued show-cause notices to Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to respond to his assertion that all of the 85 licenses granted to these companies did not have the up-front capital required at the time of the application and were in other ways illegal.[26] Some media sources have speculated that these companies will receive large fines but not have their licenses revoked, as they are currently providing some consumer service.[26]

In response to the various allegations, the Govt of India has replaced the then incumbent Telecom minister, A. Raja with Kapil Sibal who has taken up this charge in addition to being the Union minister for Human Resources Development.Mr Sibal contends that the "notional" losses quoted are a result of erroneous calculations and insists that the actual losses are nil.[20][21] The CBI conducted raids on Raja and four other telecom officials - former telecom secretary Siddharth Behura, Raja's personal secretary R K Chandolia, member telecom K Sridhar and DoT deputy director general A K Srivastava on 8 December 2010.Kanimozhi, DMK MP and Karunanidhi's daughter, was arrested and sent to Tihar jail by a Delhi court which dismissed her bail plea in the 2G spectrum scam, saying there was a possibility of witnesses being influenced considering the "magnitude" of the crime.[27] [edit]Arrests

and Chargesheets

On February 2, 2011, the Central Board of Direct Taxes arrested former Telecommunications Union Minister Andimuthu Raja. The CBDT also arrested R.K. Chandolia, Raja's personal aide, andSiddharth Behura, the former Telecom Secretary.[28][29] Both Raja and Chandolia are heard in conversation with Niira Radia in the released Radia tapes. On February 8, 2011, the CBI arrested Mumbai based Dynamix Balwas (DB) group managing director Shahid Usman Balwa in connection with the 2G spectrum allocation scam. The CBI has evidence from the Income Tax department that Shahid Usman Balwa, considered close to Raja, was instrumental in channelling the kickbacks allegedly received by the former telecom minister.
[30]

On March 29, 2011, in Delhi, the CBI arrested Asif Balwa (younger brother of the arrested former Managing Director of DB-Etisalat Group, Shahid Balwa) and Rajeev Agarwal for their alleged involvement in money transfer to the Dravida Munnetra Kazhagam's (DMK) Kalaignar TV channel.[31] On April 2, 2011, the CBDT filed its first 80,000 page chargesheet in the 2G spectrum scam before a Special Court in Delhi naming nine individuals and three companies. It said the wrongful acts of the accused deprived the government exchequer of possible revenues amounting to INR Rs 30,985 crore (USD $ 6,983,322,233). The accused include the following individuals:[32] 1. 2. 3. Andimuthu Raja, former Telecom minister Siddharth Behura, former Telecom Secretary R.K. Chandolia, Raja's former personal secretary

4. 5. 6. 7. 8. 9.

Shahid Usman Balwa, former Director of Swan Telecom (now Etisalat DB) Sanjay Chandra, Managing Director of Unitech Ltd and Unitech Wireless Gautam Doshi, Group MD, Reliance Anil Dhirubhai Ambani Group Hari Nair, Senior Vice-President, Reliance Anil Dhirubhai Ambani Group Surendra Pipara, Senior Vice-President, Reliance Anil Dhirubhai Ambani Vinod Goenka, Director, Swan Telecom (now Etisalat DB)

Group and Reliance Telecom Ltd

The three companies named are: 1. 2. 3. Swan Telecom Unitech Wireless Reliance Telecom

In the first chargesheet, the CBI had named lobbyist Niira Radia and 124 others as witnesses. On 25 April 2011, in its second chargesheet in the scam, the Central Bureau of Investigation (CBI) named five more accused individuals:[33] 1. 2. 3. 4. 5. Kanimozhi - Rajya Sabha Member of Parliament (DMK) and daughter of Tamil Sharad Kumar of Kalaignar TV Karim Morani of Cineyug Films Asif Balwa of Kusegaon Realty Rajiv B Agarwal of Kusegaon Realty

Nadu ex-Chief Minister M Karunanidhi

On 20 May 2011, Special CBI Judge O P Saini of the Delhi court ordered the arrest of DMK Member of Parliament Kanimozhi and Kalaignar TV Managing Director Sharad Kumar after rejecting their bail pleas in the 2G spectrum case.[34] [edit]Public

Accounts Committee (PAC)

The Public Accounts Committee (PAC), a 21 member committee chaired by Murli Manohar Joshi, investigated the 2G scam independently of the Joint Parliamentary Committee (JPC) and other committees. Joshi alleged that on April 28, 2011, during the last meeting of the PAC, ministers passed chits (notes) and called on PAC members to speak and behave in a particular manner, but only after

a decision to question top officials like the Prime Minister's Office, Cabinet Secretary, Attorney General and Central Bank of India director. A minister reportedly commented that the PAC draft report will be thrown in the dustbin, to which the chairman regretted and questioned if Parliament's proposals and then Supreme Court orders would be given the same treatment. Defending his action of calling witnesses from diverse fields in connection with the 2G scam probe, Joshi said it was the duty of the PAC to "trace and examine the way the money of [the] common man is spent". [35] On April 30, the chairman submitted a draft report to the Lok Sabha Speaker (Meira Kumar), and insisted that it be tabled in the Parliament. United Progressive Alliance (UPA) members claimed that a majority (11) MPs of the committee had rejected the report. Joshi termed this rejection as unconstitutional, claiming that rejection is impossible until the report is read and discussed by committee members. [35] On May 2, the speaker reappointed Joshi as the chairman of the PAC (whose term ended on April 30), despite the ongoing controversy regarding the status of the draft report. Soon after, the report was returned by the speaker. On June 28 the UPA thwarted an attempt by Joshi to present the draft before the PAC. On August 6, Joshi made a fresh attempt to represent the draft. [edit]Impact

on stock markets

The first casualty in Stock Markets once Raja was arrested was DB Realty.[36] 20% fall in the stock prices of DB Realty. Sun TV had its shares fall by 10%.[37] Sun TV COO refused the allegations. Swan Telecom Chief Balwa was arrested on Feb 8 [38] and this led to rumours of links with Anil Ambani's Reliance ADAG and it led to 20% fall of his stocks . Its reported that nearly 2 Billion USD was eroded from his stocks .[39] Spicejet stocks went down after reports of investigation on Maran's recent takeover of Spicejet .[40]

In 2007-08, when the government issued 122 new telecom licences, several rules were violated and bribes were paid to favour certain firms. Several licences were issued to firms with no prior experience in the telecom sector or were ineligible or had suppressed relevant facts, CAG report said.

related stories
Balwa retracts from plea seeking to make PM as witness in 2G case

The violations cost the exchequer $39 billion in lost revenue, the auditor said, equivalent to India's defence budget.

The telecom ministry's process of issuing licences "lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner," the auditor said. Police have accused Andimuthu Raja, the then-telecom minister, of having taken bribes from two firms which are now the local joint venture partners of Telenor and Etisalat . What was the fallout? The report sparked political outrage and the main opposition Bharatiya Janata Party all-butshut an entire session of parliament demanding a special parliamentary probe. Raja was forced to resign and was arrested over the report. The telecom ministry is considering whether to cancel some 85 licences which the audit report says were issued to firms which were ineligible for them. Many of India's biggest business names have been questioned, including billionaires Anil Ambani, chairman of Reliance ADA group, and Prashant Ruia, chief executive of Essar Group. A parliamentary panel probing the scandal questioned Ratan Tata as well as Anil Ambani. What does it mean for politics? Singh and the ruling coalition have been weakened by the events, and the BJP is seen as having regained political momentum it had lost after defeat in the 2009 federal elections. The Supreme Court criticised Singh for not acting quickly enough against Raja, a rare censure that was picked up by the BJP to accuse the government of shielding corrupt officials. The attacks have nearly paralysed the government but it is not in danger of collapsing as its slim majority is not expected to see defections by coalition partners and no one, including the BJP, wants a federal election now. The scandal has also touched Raja's regional DMK party, a leading ally of the ruling Congress party. Police say some of the bribes were routed through the DMK's television channel, controlled by the wife and daughter of the DMK party chief. DMK rules the large southern Tamil Nadu state, which goes to polls in April. The corruption cases could affect the electoral performance of the DMK-Congress coalition there. What does this mean for investment in India? While corruption itself has been largely shrugged off by investors, the regulatory uncertainty from the review of past government decisions is a source of concern to investors.

The benchmark Mumbai stock index ended the March quarter as the world's worst performer, weighed down in part by worries over fallout from a spate of scandals. If the telecom ministry does decide to cancel some or all of the 85 licences it is scrutinising, questions will be raised on whether foreign investors can trust Indian government contracts. The licences under review include those now held by Telenor and Etisalat's local ventures. It is too early to know whether licences will be cancelled, but pressure will be on the government not to do so because operators have invested millions of dollars in rolling out networks and cancelling them will inconvenience subscribers. The telecom ministry is also mulling imposing charges for spectrum it granted to telecom firms in the past and has levied fines on newer firms for not rolling out networks quickly enough. For years, India gave operators spectrum beyond contracted levels free of cost as they added subscribers. If the spectrum charges are imposed, market leaders Bharti Airtel and Vodafone would have to pay hundreds of millions of dollars in back-charges. For newer entrants, hefty fines could strain their finances and force them to exit.

2G Alert: Monetary Benefit of Rs. 72,500 Crore to Aam Aadmi Via Entry Of New Telecom Players. Has 2G Scam Facilitates Recent Mobile Tariff Hikes.
The massive hike in telecom tariffs by the largest telecom companies in India is a development with farreaching consequences for the interests of the consumers as well as for the future of the telecom revolution in India. Airtel was the first one of the dominant players in the Indian telecom sector to raise its pre-paid tariffs by an unprecedented 20 percent last week. There are reports that Vodafone and Idea Cellular, too, have either already hiked their tariffs or are in the process of doing so by a similar 20 percent. This steep rise in pre-paid tariffs at this juncture is clearly indicative of the creeping re-cartelization of the telecom sector in

India a development which is likely to wipe out the gains accrued to the subscribers from increased competition in the sector. Prior to the entry of the new telecom players in the wake of 2G licenses, the cartel consisting of Airtel, Vodafone, and Idea had consistently manipulated prices in collusion with each other and to the detriment of the consumer. Since these three players enjoyed a dominant position in the market, consumers had little choice but to pay up the high tariffs set by the cartel. In fact, the situation had become alarming enough in 2007 for the Department of Telecommunications (DoT) to request the TRAI to fix a ceiling on tariffs. This had happened soon after a simultaneous 20 percent hike in tariffs by the three largest GSM operators Airtel, Vodafone and Idea. And this was not the only occasion on which they had done so; in fact, this was a regular pattern of behavior on their part. That they have deep business relationship with each other is also borne out by the fact that they own and share the telecom towers of a single company, namely Indus Tower, and have entered into intracircle roaming arrangement with each other in 3G services. The entry of the new players had made a severe dent in the profits of the dominant players by breaking their cartel and bringing down tariffs. Uninors hugely popular two paisa per minute scheme and Videocons zero paisa scheme can be cited as examples of how the new players contributed to bringing down the tariffs. This was obviously resented by the old players. The entanglement of the new players in the all-encompassing investigation net has enabled the cartel to regroup and strike a joint blow to consumer interest by effecting a steep hike in tariffs. Having killed competition by entangling the new telecom players in the 2G investigation net, the cartel is back to what it was accustomed to do in the past. This hike is just the beginning of upward revision in tariffs; more will follow, until the old days when the rates used to be revised by the members of the cartel in tandem with each other will be firmly back. The most dreadful consequence of this would be that the aam aadmi will lose his mobile phone, since he will not be able to afford the increased prices. Thus, the sharp escalation in pre-paid mobile tariffs is bound to have an adverse impact on the affordability of services for the common man, who had started using the mobile phone primarily because of the cheap call rates. It seems that the dominant players in the Indian telecom sector wish to go back to the old happy days when they used to charge absurdly high tariffs for their services, which customers had to pay for want of options. The oligopoly they had maintained in the sector was weakened by the entry of the new telecom players which created a highly competitive atmosphere, thereby bringing the subscription rates down to the

benefit of the consumers. In fact, the mobile tariffs in India in the recent years have been probably the lowest in the world. And it was these low tariffs that made it possible for the poorest of the poor in this country to use a mobile phone and thus join the information revolution bandwagon. The ongoing increase in tariffs is an ominous signal to the ordinary consumer who cannot afford to pay more for availing the mobile services and may have to opt out of it all together. That would be a big setback to the Information and Communication Revolution in India, which, it is important to remember, has played a seminal role in the rise and growth of Indian economy in the 21st century. Competition lies at the heart of a modern economy. Competition encourages innovation, improves quality of goods and services, and brings down the prices for consumers. Thus it is not at all surprising that the sudden and steep rise in prepaid tariffs in India comes at a time when the new telecom players which had entered the sector after the 2G spectrum allocation in 2007 have been paralyzed by the ongoing investigation. Since tariffs had come down in recent years largely because of the entry of the new players, it is quite logical for dominant players like Airtel, Vodafone, and Idea to hike them now that their competition seems to be on its way out. The graph given below depicts the enormous benefit to the customers as a result of the entry of the new players: Estimation of Monetary Benefit to Consumers from the Entry of New Telecom Players

*) Expected Tariff without new operators being introduced and Actual Tariff ) Monetary Benefit to Consumers due to reduced tariffs

It is quite clear that in the absence of the new telecom players mobile tariffs would have remained at virtually the same level in 2011 as they were in 2009. Because of increased competition from the new players, however, the tariffs came down by nearly 40 percent a big gain to the ordinary consumer which the Airtel hike of 20 percent threatens to undo. Given their dominant position in the market, Airtel, Vodafone, and Idea are clearly trying to benefit at the cost of the ordinary consumer and sniff out their competitors. This does not bode well for the future of communication revolution in India. And it is precisely for this reason that the new telecom players and the increased competition they bring into the sector should be welcomed by all those who have the larger interests of society in mind. Given below is a comparison between the mobile tariffs as they have been in the last few years and what they would have been without the entry of the new players:

Item
Normal Tariff (A) Actual Tariff (B) Tariff Differential (C = A - B) Minutes on Network (D) Consumer Benefit (E = C x D /10)

Unit
Rs per min Rs per min Rs per min Million Minutes Rs. Crore

FY09
0.690 0.687 0.00 1,256,092 402

FY10
0.682 0.551 0.131 1,661,915 21,741

FY11
0.682 0.449 0.233 2,164,361 50,355

(Source: Internal Research, Morgan Stanley Report, JP Morgan Report) Based on the above analysis, the benefit to consumers (or cumulative loss to mobile operators) since grant of licenses to new operators and subsequent tariff wars, comes to about Rs. 72,500 crore, which, incidentally, is almost two-and-a-half times as much as the supposed loss to the exchequer of Rs. 30,000 crore according to the calculations of the CBI. What is even more important to understand is that this massive decline in mobile tariffs would not have occurred in the absence of a level playing field, which was briefly created as a result of the grant of 2G licenses to a number of new telecom players. Had no spectrum been granted to them along with the licenses, there would have been no level playing field, since spectrum constitutes the raw material of the telecom sector. It is, of course, not the argument here that competition did not play any role in bringing down the tariffs before 2007, a period when A. Raja was not the telecom minister and there were no 2G licenses. The fact

is that increase in competition had even earlier brought down tariffs making mobile telephony more affordable. However, the gains from the earlier waive of competition had exhausted their potential by 2007. And it was only a gust of fresh competitive winds in the form of new telecom players that could have brought down the tariffs the way they did. It must be understood clearly that there is a bargain between the spectrum price and tariffs. The higher the price at which spectrum is sold, the higher would be the tariffs which telecom companies would have to charge from the customers to stay afloat. Therefore, the notional higher revenues for the government from the auction of 2G spectrum could have come only at the cost of the consumers. Since telecom is a public good and it is the governments responsibility to promote public goods, there was nothing really surprising that the spectrum was granted to new players so as to create competition, and drive down the prices for the benefit of consumers. It was thus the benefit of the consumer and not the maximization of revenues which guided the telecom policy of the government. The tariff hikes by Airtel, Vodafone, and Idea provide clear evidence of the misuse of their dominant market position achieved by cartelization and sniffing out the increased competition as a result of the entry of new players. This is going to be highly detrimental to the interests of the consumers and to the progress of information and communication revolution in India.

2G (or 2-G) is short for second-generation wireless telephone technology. Second generation 2G cellular telecom networks were commercially launched on the GSM standard in Finland by Radiolinja(now part of Elisa Oyj) in 1991.[1] Three primary benefits of 2G networks over their predecessors were that phone conversations were digitally encrypted; 2G systems were significantly more efficient on the spectrum allowing for far greater mobile phone penetration levels; and 2G introduced data services for mobile, starting with SMS text messages. After 2G was launched, the previous mobile telephone systems were retrospectively dubbed 1G. While radio signals on 1G networks are analog, radio signals on 2G networks are digital. Both systems use digital signaling to connect the radio towers (which listen to the handsets) to the rest of the telephone system. 2G has been superseded by newer technologies such as 2.5G, 2.75G, 3G, and 4G; however, 2G networks are still used in many parts of the world.

[edit]2G

technologies

2G technologies can be divided into TDMA-based and CDMA-based standards depending on the type of multiplexing used. The main 2G standards are:

GSM (TDMA-based), originally from Europe but used in almost all countries on all six

inhabited continents. Today accounts for over 80% of all subscribers around the world. Over 60 GSM operators are also using CDMA2000 in the 450 MHz frequency band (CDMA450).[2]

IS-95 aka cdmaOne (CDMA-based, commonly referred as simply CDMA in the US),

used in the Americas and parts of Asia. Today accounts for about 17% of all subscribers globally. Over a dozen CDMA operators have migrated to GSM including operators in Mexico, India, Australia and South Korea.

PDC (TDMA-based), used exclusively in Japan iDEN (TDMA-based), proprietary network used by Nextel in the United States and Telus IS-136 a.k.a. D-AMPS (TDMA-based, commonly referred as simply 'TDMA' in the US),

Mobility in Canada

was once prevalent in the Americas but most have migrated to GSM. 2G services are frequently referred as Personal Communications Service, or PCS, in the United States. [edit]Capacities, [edit]Capacity Using digital signals between the handsets and the towers increases system capacity in two key ways:

advantages, and disadvantages

Digital voice data can be compressed and multiplexed much more effectively than

analog voice encodings through the use of various codecs, allowing more calls to be packed into the same amount of radio bandwidth.

The digital systems were designed to emit less radio power from the handsets. This

meant that cells could be smaller, so more cells could be placed in the same amount of space. This was also made possible by cell towers and related equipment getting less expensive. [edit]Advantages

The lower power emissions helped address health concerns. Going all-digital allowed for the introduction of digital data services, such as SMS Greatly reduced fraud. With analog systems it was possible to have two or more Enhanced privacy. A key digital advantage not often mentioned is that digital cellular

and email.

"cloned" handsets that had the same phone number.

calls are much harder to eavesdrop on by use of radio scanners. While the security algorithms used have proved not to be as secure as initially advertised, 2G phones are immensely more private than 1G phones, which have no protection against eavesdropping. [edit]Disadvantages

In less populous areas, the weaker digital signal may not be sufficient to reach a cell

tower. This tends to be a particular problem on 2G systems deployed on higher frequencies, but is mostly not a problem on 2G systems deployed on lower frequencies. National regulations differ greatly among countries which dictate where 2G can be deployed.

Analog has a smooth decay curve, digital a jagged steppy one. This can be both an

advantage and a disadvantage. Under good conditions, digital will sound better. Under slightly worse conditions, analog will experience static, while digital has occasional dropouts. As conditions worsen, though, digital will start to completely fail, by dropping calls or being unintelligible, while analog slowly gets worse, generally holding a call longer and allowing at least a few words to get through.

While digital calls tend to be free of static and background noise, the lossy

compression used by the codecs takes a toll; the range of sound that they convey is reduced. You will hear less of the tonality of someone's voice talking on a digital cellphone, but you will hear it more clearly. [edit]Evolution 2G networks were built mainly for voice services and slow data transmission. Some protocols, such as EDGE for GSM and 1x-RTT for CDMA2000, are defined as "3G" services (because they are defined in IMT-2000 specification documents), but are considered by the general public to be 2.5G or 2.75G services because they are several times slower than present-day 3G services. [edit]2.5G

(GPRS)

2.5G ("second and a half generation"[citation needed]) is used to describe 2G-systems that have implemented a packet-switched domain in addition to the circuit-switched domain. It does not necessarily provide faster services because bundling of timeslots is used for circuit-switched data services (HSCSD) as well. The first major step in the evolution of GSM networks to 3G occurred with the introduction of General Packet Radio Service (GPRS). CDMA2000 networks similarly evolved through the introduction of1xRTT. The combination of these capabilities came to be known as 2.5G. GPRS could provide data rates from 56 kbit/s up to 115 kbit/s. It can be used for services such as Wireless Application Protocol (WAP) access, Multimedia Messaging Service (MMS), and for Internet communication services such as email and World Wide Web access. GPRS data transfer is typically charged per megabyte of traffic transferred, while data communication via traditional circuit switching is billed per minute of connection time, independent of whether the user actually is utilizing the capacity or is in an idle state. 1xRTT supports bi-directional (up and downlink) peak data rates up to 153.6 kbit/s, delivering an average user data throughput of 80-100 kbit/s in commercial networks.[3] It can also be used for WAP, SMS & MMS services, as well as Internet access. [edit]2.75G

(EDGE)

GPRS1 networks evolved to EDGE networks with the introduction of 8PSK encoding. Enhanced Data rates for GSM Evolution (EDGE), Enhanced GPRS (EGPRS), or IMT Single Carrier (IMTSC) is a backward-compatible digital mobile phone technology that allows improved data transmission rates, as an extension on top of standard GSM. EDGE was deployed on GSM networks beginning in 2003initially by Cingular (now AT&T) in the United States. EDGE is standardized by 3GPP as part of the GSM family and it is an upgrade that provides a potential three-fold increase in capacity of GSM/GPRS networks. The specification achieves higher data-rates (up to 236.8 kbit/s) by switching to more sophisticated methods of coding (8PSK), within existing GSM timeslots.