CAG suggests cancellation of broadband spectrum held by RJIL

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A draft report by the Comptroller and Auditor General of India (CAG) has suggested cancellation of broadband spectrum allocated to Infotel Broadband Services, now a Reliance Industries company, for allegedly rigging the spectrum auction.

In a draft report sent to the Department of Telecommunications (DoT), CAG has claimed that the department failed to recognise the tell-tale sign of rigging of the auction in which a small internet service provider (ISP), Infotel Broadband Services Private Limited (IBSPL) emerged as the winner of pan-India broadband spectrum by paying 5,000 times of its net worth. However, within hours of winning the broadband wireless access (BWA) spectrum, IBSPL was acquired by Reliance Industries Limited (RIL). Later, RIL renamed IBSPL as Reliance Jio Infocomm Limited.

Further, CAG in its draft report underlines that the recommendations of the Telecom Regulatory Authority of India (TRAI) regarding the auction of BWA spectrum lacked clarity and consistency. This in turn resulted in undue advantages to certain firms. According to CAG, the eligibility criterion set for BWA auction was not well thought out. The regulator did not prescribe any stringent eligibility criterion, in terms of high net-worth and significant paid-up capital for ISP for participation in the auction, particularly when the licence fee for an ISP was pegged at Rs 1. Further, CAG claims that while TRAI had recommended a high reserve price of

Rs 1.42 billion for pan-India BWA spectrum it failed to ensure that only players which were capable of paying such high fees should have been the ones to be allowed to participate in the spectrum auction.

In addition, CAG has questioned TRAI’s silence and inaction regarding the reduction in the number of blocks put up for auction from 13 to two without making any changes to the eligibility criterion. The auditor in its report has noted that DoT failed to process and adhere to TRAI’s recommendations. CAG concludes that while auctions for 3G and BWA spectrum were conducted at the same time, the eligibility criterion for the auctions was inconsistent.