2G Spectrum Scam

Definition
• 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 in 1991.
• 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. 
 2G spectrum scam

• The 2G spectrum scam involved officials and

ministers in the Government of India illegally
undercharging mobile telephony companies
for frequency allocation licenses, which they would
use to create2G subscriptions for cell phones.
• According to a report submitted by the Comptroller
and Auditor General based on money collected
from 3G licenses, the loss to the exchequer was
Rs 176,379 crores (US$38.27 billion). 
• The issuing of the 2G licenses occurred in 2008 but the
scam came to public notice when the Indian Income Tax
Department investigated political lobbyist Niira Radia and
the Supreme Court of India took Subramaniam Swamy’s
complaints on record.
• In 2008, the Income Tax Department, after orders from
Ministry of Home and the PMO, began tapping the phones
of Niira Radia.
• This was done to help with an ongoing investigation into a
case where it was alleged that Niira Radia had acted as a
spy.
• Some of the many conversations recorded over 300 days
were leaked to the media.
• The intense controversy around the leaked tapes, became
known in the media as the Radia tapes controversy.
• The tapes featured some explosive conversations
between Politicians, Journalists and Corporate Houses.
• Politicians from Karunanidhi to Arun Jaitley, journalists
like Barkha Dutt and Vir Sanghvi and Industrial groups like
the Tata's were either participants or mentioned in these
explosive tapes
 Parties involved

• The selling of the licenses brought attention to

four groups of entities
– politicians who had the authority to sell licenses,
– bureaucrats who implemented and influenced
policy decisions,
– corporations who were buying the licenses,
– And media professionals who mediated between
the politicians and the corporations on behalf of
one or the other interest group.
 Politicians involved
• Manmohan Singh, - Prime Minister of India from heading
the ruling UPA government led by the Congress, who is
accused of not acting on removing Raja, the main accused
in the scam in spite of Finance minister Chidambaram's
warning to him .
• In a note to the PM on January 15, 2008, Chidambaram
had reiterated the finance ministry's suggestion to auction
spectrum as the price would be based on scarcity value.
• He then went on to suggest this could be used as one-
time for additional spectrum
• Kanimozhi member of parliament and daughter of DMK
chief Karunanidhi.
• In November 2010 Outlook published transcripts of six
conversations between lobbyist Niira Radia and Kanimozhi
from May 2009.
• India Today claims that these conversations reveal that
Kanimozhi filtered the information flowing to her father
and thereby "tipped the scales in favour of" A. Raja, who
was Minister of Communications and Information
Technology during controversial 2G wireless spectrum
allocations in 2008.
• A. Raja, the Ex-Minister of Communications
and Information Technology who was the
minister when the controversial second round
of spectrum allocations took place.
• Mr.Raja, an MP of the Dravida Munnetra
Kazhagam from the Nilgiris constituency, was
forced to resign following the public outcry.
• Arun Shourie, the minister for Telecom during 2003 in the previous
BJP regime.
• It was Arun Shourie who introduced the controversial technology
neutral "Unified Access(both Basic & Celluler) Services License",
which allowed fixed line operators who had paid much lower
license fees to offer mobile phone services, at first in the limited
WLL mode and later, following an out of court settlement between
mobile operators and the BJP govt, full mobility.
• This gave an advantage to players like Reliance and Tata
Teleservices who managed to get mobile spectrum without paying
the hefty fees that earlier operators like BPL Mobile had paid.
• Pramod Mahajan, the minister for Telecom between 1999 and
2003. Mr.Mahajan was the minister when the BJP Government
took the controversial decision to shift from a license fee
based regime to a revenue sharing model which was roundly
condemned both by political parties and by economic experts. 
• The Comptroller and Auditor General also filed adverse reports
citing a loss of over 64,000 crore (US$13.89 billion) caused by
this decision.
• The crux of A. Raja's defence is that he was following a policy
of 2G allocations put in place by the BJP and it would be unfair
to levy prices based on 3G spectrum to 2G licenses
 Bureaucrats involved

• Siddhartha Behura, former telecom secretary

who served in the DOT at the time of the 2G
allocation.
• Pradip Baijal, a bureaucrat who is alleged to
have implemented policies that favored certain
Telecom companies when he was heading the
TRAI.
• Raja has made references to Baijal's decisions in
2003 as the basis for his decisions in 2008
 Corporations involved

• Unitech Group a real estate company entering the telecom industry with its 2G
bid; sold 60% of its company stake at huge profit to Telenor after buying licensing.
• Swan Telecom sold 45% of its company stake at huge profit to Emirates
Telecommunications Corporation (Etisalat) after buying licensing.
• Loop Mobile
• Videocon Telecommunications Limited
• S Tel
• Reliance Communications
• Sistema Shyam Mobile (MTS) – Sistema Mobile Russia
• Tata Communications
• Vodafone Essar
• Dishnet Wireless
• Allianz Infra
 Corporate personalities involved

• Anil Ambani - Reliance Group (ADAG)

• Shahid Balwa - DB Realty and DB Etisalat
(formerly Swan Telecom)
• Prashant Ruia - Essar Group
 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 and leaked creating the
Nira Radia tapes controversy
• Barkha Dutt, an NDTV journalist alleged to have
lobbied for A. Raja's appointment as minister
• Vir Sanghvi, a Hindustan Times editor alleged to have
edited articles to reduce blame in the Nira Radia
tapes.
 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 1,537 crore (US$
333.53 million). Shortly thereafter, the board sold 45% of the company to Etisalat
for 4,200 crore (US$911.4 million).
• Similarly, a company formerly invested in real estate and not telecom, the Unitech
Group, purchased a license for 1,661 crore (US$360.44 million) and the company
board soon after sold a 60% stake in their wireless division for 6,200 crore (US$1.35
billion) 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 Technology's telecommunications division 10,772 
crore (US$2.34 billion). The amount of money expected for this licensing by
the Comptroller and Auditor General of India was 176,700 crore (US$38.34 billion)
Relationship between media and government

• 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.
• 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.
 Ratan Tata petitions over leak

• he 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.