The Supreme Court has rightly quashed a public interest litigation challenging the permission given to Reliance Jio for offering voice telephony, using spectrum it had originally got for broadband services. This should serve as a wake-up call for the Comptroller and Auditor General of India on the manner in which it assesses irregularities in policymaking and the resulting losses to the exchequer. The PIL was based on a report by the CAG, which questioned a 2013 policy decision that permitted internet service providers (ISP) having broadband spectrum to launch voice telephony services by paying an additional fee of ₹1,658 crore. The CAG had initially put the notional loss to the exchequer on this account at ₹22,842 crore, but later revised the figure to ₹3,367 crore. The CAG clearly overstepped its brief because the policy decision was taken transparently after following due process. It was also wrong in concluding that the policy favoured Reliance Jio because the migration path was open to all internet companies with broadband spectrum.
The CAG’s primary role is to raise a red flag if irregularity in procedures followed by government departments or public sector undertakings result in any revenue loss to the exchequer. It shouldn’t grapple with policy decisions of the Government implemented in a transparent manner without discrimination between market players. Ideally, such interventions are best left to the regulators, especially in a highly technical sector such as telecom. In the case of RJio, the apex court has observed that the CAG had erred in calculating the so-called losses because it had compared the value of spectrum in 2100 MHz with spectrum in the 2300 MHz band. Unlike the 2100 MHz airwaves used globally for 3G services, the feasibility of the 2300 MHz band wasn’t established until recently. For a spectrum band to be commercially viable, it needs both suitable propagation characteristics as well as an ecosystem of compatible and cheap mobile devices that can run on these radio waves. A sector regulator such as TRAI would know that the 2300 MHz band suffered on both counts and hence its value cannot be compared with the 2100 MHz band.
While the Supreme Court’s decision should prompt the CAG to adopt more scientific methods, it is also perhaps time for the sector regulators to get their act together. One of the reasons for the large number of litigations in the telecom sector is that the regulators are sometimes seen as being biased and favouring one lobby group or the other. In the 2G spectrum scam, for example, the sector regulators failed to take action against companies that were blatantly violating licensing rules and, as a result, intervention by constitutional bodies such the CAG and the Supreme Court became necessary. The CAG applied similar logic in determining its views on RJio’s case because it did not trust the process followed by TRAI or DoT. The onus is on the sector regulators to establish their credibility.
