The document discusses the 2G spectrum scam that occurred in India in 2008. Key points: - 2G spectrum refers to the electromagnetic spectrum allocated to mobile phone companies for providing 2G services. It was allocated by the government at low prices in 2008. - The Comptroller and Auditor General of India estimated that the scam caused a loss of 1.76 lakh crore (US$40 billion) to the exchequer due to spectrum being allocated at 2001 prices rather than market prices. - Many politicians and corporate executives were accused of taking bribes in exchange for spectrum allocations. The former Telecom Minister A. Raja was a key figure accused in the scam and had to resign

1. 1. 2G SPECTRUM SCAM
2. 2. WHAT IS SPECTRUM?Spectrum is specific range of electromagneticwavelength,
which is used in radio, TVbroadcasting, mobile communications and internetfacility.
For AM 540KHz, Cable TV 145-860MHz, 3G2100MHz, broadband 2300MHz
spectrums are used.
3. 3.  2G is short for second-generation wireless telephone technology. The
wavelength between 800-1900MHz is called 2G spectrum, which is useful for mobile
communication technology.
4. 4. WHAT ARE THE USES OF 2G SPECTRUM? Second generation networksare
digital. They preventeavesdropping to some extent.2G devices emit less radiation.The
penetrative levels are high.Text messaging, e-mail sendingare made possible due
todigitalization. GPRS,EDGEtechnologies are up-gradation in2G technology. MMS
facility isinitiated. Pocket internet ismade possible.
5. 5. WHO ALLOTS 2G SPECTRUM TO COMPANIES?As it is national property,
people have right over it.As people have elected their representatives, theyhave the
power to allocate this resource. Asgovernment is divided for administrativepurposes,
it is the onus of telecommunicationministry to allocate to various telecom
companiesand the income generated should be used forwelfare of people.
6. 6.  In 2008,the UPA, issued 122 new telecom licenses to several domestic companies
with little or no experience in telecom sector, and at a price set in 2001. The shortfall
between the money collected and the money which the law mandates to be collected
is 1.76 lakh crore rupees.
7. 7. 2G SPECTRUM CASE: A CHRONOLOGY - Oct 22, 2009: The Central Bureau
of Investigation (CBI) files a first information report (FIR) against unidentified
officials of the department of telecommunications on the 2G spectrum (airwaves)
auction, based on a reference from the Central Vigilance Commission. - November
first week, 2010: Media publishes contents of the Comptroller and Auditor General
(CAG) report on the 2G spectrum auction. The CAG said the public exchequer
suffered a notional loss of Rs.1.76 lakh crore ($40 billion) due to faulty auction
procedure under the then communications minister Andimuthu Raja in 2008. - Nov 9,
2010: Protests start by the National Democratic Alliance (NDA), the Left and other
parties, which demand a joint parliamentary committee (JPC) probe into the spectrum
scandal which washed away the five-week winter session of parliament.
8. 8.  - Nov 14, 2010: Raja submits his resignation to Prime Minister Manmohan Singh
in New Delhi. Claims he did no wrong. - Nov 16, 2010: CAG report on 2G spectrum
allocation tabled in both houses of parliament amidst uproarious scenes. - Dec 8,
2010: The CBI raids the house of Raja and premises of former aides Siddharth Behura
and R.K. Chandolia in New Delhi. It also raids houses and offices of Rajas relatives,
associates and some journalists and social workers in Tamil Nadu linked to the DMK
and Raja. The CBI claims recovering incriminating documents. - Dec 15, 2010: The
CBI raids the houses and offices of Niira Radia, a corporate lobbyist linked with Raja.
She is subsequently questioned by the CBI several times. - Dec 24-25, 2010, and Jan
31, 2011: The CBI questions Raja in New Delhi. - Feb 2, 2011: The CBI arrests Raja,
Chandolia and Behura.
9. 9.  - April 2, 2011: The CBI files charges against nine people and three firms -- Raja,
Chandolia, Behura, Swan Telecom promoter Shahid Balwa, director Vinod Goenka,
Unitech director Sanjay Chandra and three officials from the Reliance Anil Dhirubhai
Ambani Group -- Gautam Doshi, Hari Nair and Surendra Pipara. - April 20, 2011:
Special city court denies bail to Goenka, Chandra, Doshi, Nair and Pipara. - April 25,

2. 2011: In a major embarrassment for Karunanidhi, daughter Kanimozhi named co-
conspirator, along with Sharad Kumar of Kalaignar TV, Karim Morani of Cineyug
Films, and Asif Balwa and Rajiv B. Agarwal of Kusegaon Realty. - May 20, 2011:
Kanimozhis bail plea rejected. She is sent to judicial custody in Tihar Jail. Sharad
Kumar also sent to jail. - June 20, 2011: The Supreme Court refuses Kanimozhis bail
plea. - July 6, 2011: The CBI files a status report in the Supreme Court, alleging that
Maran had forced telecom promoter C. Sivasankaran to sell his Aircel stake to the
Maxis group considered close to his family. - July 7, 2011: Maran resigns from the
union cabinet.
10. 10. WHO ALL BENEFITED FROM THIS SCAM ? 2G spectrum was allocated
beyond contracted quantity to 9 firms including Bharti, Vodafone, Idea, BSNL,
Reliance, Aircel," the report said.Niira Radia is said to be involved. Read her details.
Department of Telecommunications (DoT) circumvented the rules to help Swan
Telecom, which effectively acted as a front for Reliance Telecommunications. The
charges in the CAG report are that Swan should not have been considered for a
license because Reliance Communications held 10.7% stake in Swan - and according
to the rules, a telecom operator cannot own more than 10% stake in another telecom
company operating in the same service area. "Email ID of Swan Telecom was shown
as that of a Reliance ADA group official Another big beneficiary of the 2G spectrum
allocation was Unitech Wireless, which had no experience in the telecommunication
sector. After Unitech got the license for a throwaway price of Rs. 1,661 crore, it sold
60 per cent stake to Telenor Asia for a whopping Rs. 6,200 crore
11. 11. OTHERS IN THE NET DMK chief M Karunanidhis daughter and MP
Kanimozhi who has been named by the CBI as a co- conspirator with A Raja Shahid
Balwa, the promoter of Swan Telecom, who the CBI believes had a central role in the
2G spectrum scam. He has been accused of colluding with former Telecom Minister
A Raja by allegedly channelizing kickbacks Raja got from the spectrum sale into the
real estate Unitech chief Sanjay Chandra and DB Realty founder Vinod Goenka who
have been chargesheeted for cheating and conspiracy Three senior executives of Anil
Ambani controlled ADAG, Gautam Doshi, Hari Nair and Surendra Pipara. All these
are currently lodged in Tihar Jail Former telecom secretary Sidharth Behura, who
allegedly shut counters to physically block other telecom companies, faces the same
charges as Raja. And so does Rajas Personal Secretary RK Chandolia
12. 12. Comptroller and auditor Central Bureau of General of India Investigation Central
Vigilance Directorate of Enforcement Commission
13. 13. COMPTROLLER AND AUDITOR GENERAL OF INDIA (CAG) The
Comptroller and Auditor General of India (CAG) said it has submitted to the
government the report on the 2G spectrum allotment that is presumed to have caused
a revenue loss of up to Rs. 1.76 lakh crore. CAG has accused the telecom ministry for
undervaluing 2G spectrum, sold to new players in 2008, and held that the allotment
price was not realistic, which has caused a revenue loss of up to Rs. 176,700 crore to
the government. The report is also believed to have castigated telecom minister A
Raja for ignoring the advice of finance and law ministries on allocation of 2G
spectrum to benefit a few operators. It is also believed to have criticized telecom
regulator TRAI standing as a helpless spectator when its recommendations were being
ignored or misused. The CAG report said the price at which the spectrum was
allotted in 2008 was based on 2001 prices, which was quite low and has resulted in a
loss to the government exchequer.

3. 14. 14. MEDIA PERSONS ACCUSED Nira Radia, a corporate lobbyist whose
conversations with politicians and corporate entities were recorded by the government
and leaked creating the Nira Radia tapes controversy Barkha Dutt, an NDTV
journalist alleged to have lobbied for A. Rajas appointment as minister Vir Sanghvi, a
Hindustan Times editor alleged to have edited articles to reduce blame in the Nira
Radia tapes Rajdeep Sardesai, a CNN IBN senior editor
15. 15. THE ROLE OF KALAIGNAR TV One of the companies named by the CBI in
the 2G scam - Swan Telecom - allegedly sent Mr Raja a Rs. 214-crore kickback that
was routed through a maze of companies but rested finally with Kalaignar TV channel
in Chennai that is owned mainly by Kanimozhi and Dayalu Ammal. Together, they
have 80% stake in the company. Sharad Kumar, the Managing Director of Kalaignar
TV, owns the balance and has also been accused of conspiring with Mr Raja.
16. 16. REASONS FOR 2G SCAM:1. Political reasons:Co-alition governments are
making central governments weaker to takedecisions. A.Raja, who was main accused,
should have been removed whenhe was targeted by main political parties, but he was
given for second timewith the fear that DMK might withdraw its support. This
decision wasbecause of co-alition political parties.High spending in elections is
making them resort to corruption which isleading to scams. After huge expenditure,
when they are elected they arerecovering the money they have put in elections. They
are not taking care ofpeople by whom they are elected.No regulations for Members of
Parliament is also reason for their corruptionleading to scam. They have some
benefits as they are representatives of thebiggest democracy, which are being misused
by them.
17. 17.  2. Business reasons: Businessmen sponsor politicians when they are in fray.
After election, they seek some concessions from politicians for their businesses, if
they are elected. Politicians, being workers of people, work for these businessmen in
their offices. Businessmen sponsoring politicians, businessmen turned politicians are
in forefront of making scams.
18. 18.  3.Media reasons: Growing media activism is throwing open the gates for crooked
and worm-natured people resort to it. Commercialization of newspapers is the prime
reason for having scams related to them. Second reason is that they are being honored
and having direct relations with political leaders leading to connive in their activities.
19. 19.  4. Bureaucratic reasons: The steel frame was turned into wooden frame long ago.
It is at the mercy of politicians. Independence of civil service is no more. They are
only submissive to their political bosses. They are afraid of being transferred if they
do not cooperate . There are five to six transfers in a year related to honest officer
makes shiver others also. Courts do not interfere in the issues of transfers.
Administrative tribunals can not help. Most of the Civil servants are silent spectators
and coming to Mr. Behura, who has been arrested in 2G scam, was
telecommunication secretary, not for his dishonesty but only signing of 100 letters of
issuance licenses done within days of time.
20. 20. THE POLITICAL CRISIS AFTER THE SCAM The stand-off between the
government and the Opposition over 2G scam continues. The Opposition wants a
Joint Parliamentary Committee (JPC) to investigate the 2G scam. Parliament has not
functioned at all this winter session - the Opposition says it wont let the House get to
work till a JPC is announced. Niira Radia also seem to be involved in big way to 2G
spectrum scam. She is a corporate lobbyist for big corporate leaders like TATA
group, Reliance Industries etc

4. 21. 21. SHORTFALL OF MONEY A. Raja arranged the sale of the 2G spectrum
licenses below their market value. Swan Telecom, a new company with few assets,
bought a license for Rs. 1537 crore. Shortly thereafter, the board sold 45% of the
company to Etisalat for Rs. 4200 crore. Similarly, a company formerly invested in
real estate and not telecom, the Unitech Group, purchased a license for Rs. 1661 crore
and the company board soon after sold a 60% stake in their wireless division for Rs.
6200 crore to Telenor. The nature of the selling of the licenses was that licenses were
to be sold at market value, and the fact that the licenses were quickly resold at a huge
profit indicates that the selling agents issued the licenses below market value. Nine
companies purchased licenses and collectively they paid the Ministry of
Communications and Information Technologys telecommunications division Rs.
10,772 crore,The amount of money expected for this licensing by the Comptroller and
Auditor General of India was 1,76,700 crore.
22. 22. ADVANTAGES The lower power emissions helped address health concerns.
Going all-digital allowed for the introduction of digital data services, such as SMS
and email. Greatly reduced fraud. With analog systems it was possible to have two or
more "cloned" handsets that had the same phone number. Enhanced privacy. A key
digital advantage not often mentioned is that digital cellular 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.
23. 23. DRAWBACKS 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. Analog has a smooth decay curve, digital a jagged steep 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. 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 someones
voice talking on a digital cell phone, but you will hear it more clearly.
24. 24. RECOVERY CPI(M) has reiterated its demand for cancellation of the licenses of
those private Telcos who got the spectrum through the first come first served formula
and recover the losses. Com. Prakash Karat, General Secretary, CPI (M) in a
statement said:” It is not enough to arrest a few persons. The Government should
cancel these licenses and auction the spectrum so that the revenue lost can be
recovered.” CPI(M) was the first to point out to this biggest scam in the country in
2008 itself. Its continuous exposal and also of the other opposition parties had
compelled the Government to dismiss Communications Minister A.Raja and
appointment of JPC to inquire in the matter.
25. 25. INITIATIVES TO AVOID SCAMS (REMEDIES):Setting up of preventive
mechanism. Prevention is better than cure.Preventing scams in bud stage is very
important.Ministers, civil servants relation to be reformed.Protection of civil servants.
There should be a limit for transferswithin a year.Stopping the culture of sponsoring
politicians by businessmen. Itshould be dealt seriously.Searching ways by Election
Commission sponsoring for contestantswhich can bring ethical and moral persons to
political arena.Saving the media from rotting through checks and balances.People
should be aware of consequences of weak governments andshould enable strong
governments.

5. 26. 26. RECOMMENDATIONS TRAI Links Excess 2G Spectrum Price with 3G
Auction Price – Big Mess TRAI in its recommendations has surprised everybody that
GSM spectrum assigned beyond 6.2MHz up to 8MHz to be charged at current (linked
to 3G auction) price and at 1.3x current price beyond 8MHz . It has recommended no
auction of 2G spectrum even as subscriber linked criteria for allotment done away in
favor of roll out obligations.
27. 27. OTHER KEY RECOMMENDATIONS OF TRAI ARE 900MHz spectrum to be
valued at 1.5x Current price; 1800MHz valued at 1x ‘Current’ price No cap on the
number of operators/circle as in future spectrum should be delinked from UAS
licenses Uniform license fee of 6% from 2013-14 Promoter lock-in of 3 years
removed M&A approval only if merged entity has not more than 30% of circle
subscriber base and/or AGR. Spectrum cap for merged entity still kept at rather low
levels of 14.4/10.0MHz (GSM/CDMA). Further, merged entity should pay 3G-linked
price for spectrum >6.2MHz, as well as a transfer charge at 5% of the difference
between transaction price and total spectrum price
28. 28.  Impact of TRAI Recommendations on 2G Spectrum – The recommendations are
pro-new entrants, and pro-CDMA incumbents (dual technology operators) like
Reliance Communications and Tata Teleservices. TRAI has committed a mistake of
earlier recommending Subscriber linked Spectrum allocation policy and now trying to
cover it under the 3G auction price. Well, retrospect charging for spectrum creates
uncertainty in a sector already bleeding by irrational tariffs. Further, what is the basis
of using 3G bids for pricing 2G spectrum, as the former are driven more by scarcity
and lack of a transparent spectrum roadmap.
29. 29. CONCLUSION: Whenever a scam raises, Indian government is dealing with
scam rather than reasons behind it. Loopholes in system need to be corrected in
order to avoid these scams. If these are not dealt properly so many scams are on the
way for us. A perfect policy making and new blood in political veins only can help
India to be out of scam era.