Financial Frauds in India

The 2G scam

Aniruddh Narsimhan - P35114
Disha - P35125
Manu Vatayan – P35149
Mrinalini - P35152
Svethal Bhasin - P35188

2G spectrum scam took place in India in late 2000’s which involved politicians and government officials who tried illegal undercharging mobile telephone companies for frequency allocation licenses, which they would then use to create 2G spectrum subscriptions for mobiles. The entire process of allocation of UAS licences lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner. The Hon'ble Prime Minister had stressed on the need for a fair and transparent allocation of spectrum.
Let us understand the intricacies of the scam.

What is Spectrum?
Radio Frequency Spectrum is the entire range of wavelengths of electromagnetic radiation which is used as carrier of wireless transmission and thus a basic requirement for providing wireless services. It is a finite but non-consumable global natural resource and commands high economic value in the telecommunication sector
In simple words , Whenever data is being transferred from one place to another, say Ahmedabad to Mumbai. So, If data was a “truck”, how would you transport it from Ahmedabad to Mumbai ?
Obviously through a path. Spectrum is that path.
Radio frequency spectrum, i.e., the entire range of wavelengths of electromagnetic radiation, is a finite global natural resource with a high economic value, due to its heavy demand in the telecommunications sector. The word 'Spectrum' basically refers to the collection of various types of electromagnetic radiations of different wavelengths. Frequencies are allocated by the International Telecommunication Union (ITU) at "World Radio Communication Conferences". Allocations are made on a regional basis and are made for different services. Allocation of spectrum in ITU Radio Regulations exists from 9 KHz to 1000 GHz. In India, the radio frequencies are confined between 9 KHz and 400 GHz.
Spectrum can be classified according to its width. Spectrum Range is as follows: - Cable TV | 145-860MHz | 2G | 800-1900MHz | 3G | 2100MHz | 4G, broadband internet | 2300M |

So, we first send the data from Ahmedabad to a Satellite hovering in the sky, and from there, send the data to Mumbai. Now we face a problem:

Problem Number 1:
First satellite which would be super expensive so private player (Businessman) cannot afford it.
But here comes the Government it helps in launching the satellite using ISRO. Thus the spectrum, which was needed for businessmen, is created. Then Government will charge money to whosoever (cell phone company) uses this spectrum.
Now a businessman wants to launch his own mobile service (like Vodafone, Airtel etc). Therefore he is interested in using this 2G highway, to transport his data packets. He can also use 3G or 4G, which provide faster data transfer, but they’re more expensive.

Problem Number 2: Things needed to access Spectrum Problem (businessman’s side) | Solution | 1. Driver’s License (to operate the truck) | Apply to Department of Telecom. | 1. Pay rent/toll for using this highway (spectrum). Just like people pay for using Bandra-Worli sea-link or Yamuna Expressway. | Get loan from SBI. Pay the money to Government. Or even better, bribe minister so they give free spectrum. |
Since highways have fixed capacity. So government cannot give license to 500000 businessmen else, it’ll create traffic jam. So, From Government’s side what should be the “ideal” solution?
Check the application of people who are applying for the service: does he have previous experience of running telecom business.
After verifying his record, sell the access to this Spectrum.

Problem Number 3:
How should Government sell access to this Spectrum?
Two methods, 1) First Come First Serve 2) Auction.
Both have their advantages and problems.
You already know how cinema tickets are sold. The person, who is first in the line, gets the ticket. If you come late, you don’t get the ticket. This also leads to ticket black-marketing, for example, I come early, buy all the tickets. You come late, all the tickets are sold, I offer my tickets to you at higher price and make huge profit. This is not good for economy because I’m making money without producing any new goods/services which will lead to inflation. But according to a theory propounded by Mr.Sibal, this is “zero loss” because cinema hall did receive money for ticket sale. So it’s not like Cinema-hall making losses!

Anyways, for common people:
Buying ticket is not crime but buying ticket but not watching movie and selling that ticket to third person higher price crime.

Method#2: Auctioning method
As the name suggest, auction the tickets. If person A offers Rs.200 for a seat and Person B offers Rs. 500 for the same seat, then sell the ticket to Person B.
From theatre owner which is Govt’s point of view: this method may look good, because now we can earn more money per ticket sold and use that money to finance whatever Development scheme we’ve in our mind.

Now the problem: if Person B was a doctor, and he had to shell out Rs.500 for one movie ticket. Then he may charge more fees from patients at his clinic to keep the profit margin same.
So overall effect on economy was not good.

What is CAG?
The Comptroller and Auditor General (CAG) of India is an authority, established by the Constitution of India, who audits all receipts and expenditure of the Government of India and the state governments, Government-owned corporations and any non-banking/ non-insurance company in which the state and Union governments have an equity share of at least 51 per cent or subsidiary companies of existing government companies. Its reports are taken into consideration by the Public Accounts Committees.

First-cum First-serve vs. Auctioning: The Dilemma
The story began in January 2008 Department of Telecommunications issued 120 new licences for unified access services on the same day. These licences were issued at price which had been discovered in 2001. Issuance of 120 licences in just one day and at a price discovered in 2001 drew the attention of Media, Parliament and informed members of the civil society. Questions were raised regarding the transparency in the allocation process and the failure in maximization of revenue generation from the allocation of spectrum, which is a national asset. It was in this context that this department felt that there was a sufficient justification to review the entire process of issuance of licences, award of spectrum and the implementation of the Unified Access Services regime.

Report by CAG
The Comptroller and Auditor General (CAG) report on the allotment of 2G Spectrum licences, tabled in the Lok Sabha today, has held former Telecom Minister A Raja responsible on many fronts for violating guidelines, indulging in favouritism and costing the government Rs. 1.76 lakh crores by mishandling the allocation of the 2G spectrum in 2008.
Some highlights of the report: * 85 firms had suppressed facts and gave fictitious papers to DoT. * 2G spectrums were allocated to new players at throwaway prices. 122 2G licenses were given by Raja for over Rs 9,000 crore while 3G auctions for a smaller number of licenses had fetched the government a sum of Rs 69,000 crore. * Spectrum is a rare national asset and should have been auctioned. But DoT kept spectrum pricing and did not follow its own practise of first-come-first-serve in letter and spirit. * Undue advantage was given to Swan Telecom and 9 firms including Bharti, Vodafone, Idea, BSNL, Reliance, Aircel in allocation of spectrum. * Therefore Government lost money (Besides, whatever money made by ticket black-marketeers, is loss to the cinema hall owner) * Thus, Government lost Rs.1.76 lakh crores.

CAG issued show-cause notices: In mid November the comptroller Vinod Rai issued show-cause notices to Unitech, Swan Telecom, 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. 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.
The Raja Maharaja of India

Raja ignored the advice of PM, Finance Ministry, Law ministry, TRAI etc of selling the spectrum via ‘auctioning’. But he used “first come first serve basis.”
He allowed ineligible companies to apply and get license (e.g. Unitech). There were companies who got license but did not start business (Unitech and Swan) and Raja did not take action against them and should have cancelled their licenses or imposed heavy fines on them. He was arrested in 2011 but got bail in 2012. As of August 2012, trial is being conducted in Special CBI Court.

Role Of Kanimozhi

Shahid Balwa (SWAN) got benefit because of Raja. So he had to pay bribe he transferred Rs.200 crores to “Kalaignar TV channel”, which is owned by Kanimozhi and her step mother Dayalu Amma and other family members.
According to CBI, Kanimozhi was in regular touch with A Raja regarding launching of Kalaignar TV channel and its other pending works.She was charged of criminal conspiracy to cause criminal breach of trust by a public servant and was arrested in 2011.
As of August 2012, trial is being conducted in Special CBI Court.

Role of the Finance Minister in this scam
The Money that was collected by the DoT on account of Entry Fee was deposited into the accounts of the Finance Ministry. Therefore, the DoT would have consulted the Finance Ministry for a policy change that had impacted revenue. The Finance Ministry took a U-turn and allowed this scam to happen. A number of times, the Finance Ministry had in writing objected to the DoT’s plan to award licenses at 2001 rates. One such letter was written by the Finance Secretary on November 22, 2007 to the DoT Secretary. After DoT issued 122 LOIs (Letter of Intents) on January 10, 2008, the Finance Minister, P Chidambaram, wrote a consenting letter to Mr Raja that whatever has happened was fine, but next time the spectrum should be auctioned. After this, Mr Raja converted LOIs into Licenses. If the Finance Minister would have wanted to stop further process of converting LOIs into Licenses, then he could have issued direction to the DoT to stop further process
Involvement of PM

The scam happened with his full knowledge and consent. Not only that, he took a U-turn by allowing in January 2008 what he objected to in November 2007. On November 2, 2007, the Prime Minister wrote a two page letter to Mr A Raja asking him to consider the auction route. Subsequently Mr Raja sent three letters to the Prime Minister explaining in detail how he wants to deal with the applications, and insisting to follow FCFS policy and awarding licenses at Rs 1,658 crore. He wrote a last letter to the PM on December 26, 2007. This was accepted by the PM in his letter dated January 3, 2008 to Mr Raja. Why did PM change his stand?

Actions taken by GOI Mr Kapil Sibal took over as Telecom Minister; he issued show-cause notices to certain companies and collected about Rs 280 crore as penalty from them for not fulfilling the rollout obligations. Thereafter the Government has not taken any step

Covering Up done by Governments
Mr Kapil Sibal started a campaign against the CAG calling their figure of loss of Rs 1.76 crore as erroneous. He also said that no loss has happened. Later, he started saying that the Government followed the same policy of FCFS as was followed during NDA period. The reputation of Government was already down. So in terms of reputation they’ve got nothing to lose.
Thus they make excuses that 1. 2G =Zero loss."zero loss" was caused by distributing 2G licenses on first-come-first-served basis. It has to be pointed out, however, that "zero loss" can simply mean that frequencies were not sold for less than cost. The phrase indicates nothing about the legitimacy of the sale. 2. Since licenses were not auctioned the companies got them cheap which resulted in call rates being cheaper and public benefited from this. 3. Congress Government also maintained that they merely followed the policy of NDA (BJP), i.e. spectrum was linked with license and first-come-first serve basis.

What the government could have done
The Supreme Court slammed the Government saying that the 2G spectrum scandal could have been avoided if timely action was taken following the November 2, 2007 letter by Prime Minister Dr Manmohan Singh.

The bench headed by Justice G S Singhvi and Justice H L Duttu said that if the government had acted on the letter, the scam could have been avoided, adding that November 2, 2007 was a crucial date relating to the case. The bench added that a decision could have been taken even after the then telecom minister A Raja had issued the Letters of Intent (LoI), referring to the controversial March 25 office memorandum sent to the PM by the then finance ministry headed by Pranab Mukherjee.
While the telecom commission meeting had been postponed from January 9 to January 15, 2008, the telecom ministry under Raja issued LoIs on January 10.
The memorandum issued, stressed that the finance ministry under P Chidambaram was not probably wrong in not interfering only because LoIs were issued.
Corporates Involved

India's telecoms scandal has been rumbling, when 122 mobile licences covering a third of India's 2G spectrums since 2008 were awarded to eight companies. India today has 14 mobile-phone firms in all. A constant drip of disclosures since 2008 has numbed the public's outrage and on February 2nd India's Supreme Court cancelled all 122 licences.
Politically, the effects of scandal are not yet known. Andimuthu Raja, the telecom’s minister at the time, is in jail. His trial could reveal all manner of dirt. The coalition government, led by the Congress party, is shaken, though its supporters hope no other big scalps will be claimed. .

From one cell(phone) to another cell (prison).
Out of the 122 licences granted, 85 went to six new entrants, two of which promptly made fortunes by selling stakes in the licences to foreigners. CAG found that a year later, none of the six had met its obligation to roll out a network.
The country had moved “substantially forward” in dealing with corruption, but that there was still “a long way” to go. Yet after the 2G scandal that is surely a complacent view. It has taken by the courts, not the political system, to act. Industry seems to be gripped by a culture of denial. There is anecdotal evidence that corruption is rife in most industries that interact with the government: those that require licences, access to natural resources or changes in the law.
Accordig to the report prepared by the government's auditor, the Controller and Auditor General (CAG),85 of the 122 licenses were issued to companies which suppressed facts, disclosed incomplete information and submitted fictitious documents to DoT and thus used fraudulent means of getting licenses and thereby access to spectrum." It is unflinching in its indictment of Raja, blaming him for violating guidelines, indulging in favouritism and costing the government Rs. 1.76 lakh crores by mishandling the allocation of 2G spectrum in 2008. 2G spectrum was allocated beyond contracted quantity to 9 firms including Bharti, Vodafone, Idea, BSNL, Reliance, Aircel.

CAG’s report says that the Department of Telecommunications (DoT) circumvented the rules to help Swan Telecom, which effectively acted as a front for Reliance Telecommunications. Since 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 so the charges in the CAG reports are that Swan should not have been considered for a license . Email ID of Swan Telecom was shown as that of a Reliance ADA group official," said the report. According to the CAG report, the application should have been rejected by the Department of Telecom (DoT). DoT did not follow its own practise of first-come-first-serve in letter and spirit.

The report also says that Reliance Telecommunications was among those who got undue benefits, and that Reliance was allotted spectrum ahead of the others. According to CAG, Idea and Spice were wrongly denied spectrum on the grounds of a proposed merger.

Reacting to the charge, Reliance stated: "Our Group had no shareholding in Swan Telecom Ltd. at the time of grant of license to them or any time thereafter, and that issue is accordingly not relevant to our Company. Reliance Communications has always been in full compliance with all applicable laws, rules and regulations, and there has been no violation of our license conditions at any stage on account of cross-holdings in excess of 10%."

CAG indicts Unitech Wireless

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 crores, it sold 60% stake to Telenor Asia for a whopping Rs. 6,200 crores.
In its report, CAG indicts Unitech saying the high value paid by Telenor was for the 2G spectrum, and not for other inputs as claimed by Unitech. It also says that such huge equity infusion, which should have accrued to the public exchequer, went as a favour to the new licensees for enriching their business. Speaking to NDTV, the telecom giant Telenor said that its investment in Unitech Wireless conformed to all regulations.
Role in examining the 2G spectrum scam, Corporate Affairs Minister Salman Khurshid said his ministry will inspect the books of companies involved in the muddle provided a reference is made to it. Khurshid, however, clarified that his ministry would not do anything which would hampering ongoing investigations by different government agencies. When asked if the MCA will take any suomoto action as in the case of Unitech Wireless, of which the Ministry is carrying out technical scrutiny, the Minister said that it was routine inspection.

Role in examining the 2G spectrum scam, Corporate Affairs Minister Salman Khurshid said his ministry will inspect the books of companies involved in the muddle provided a reference is made to it. Khurshid, however, clarified that his ministry would not do anything which would hamper ongoing investigations by different government agencies. When asked if the MCA will take any suo-moto action as in the case of Unitech Wireless, of which the Ministry is carrying out technical scrutiny, the Minister said that it was routine inspection.
"Technical scrutiny is carried out by Registrar of Companies regularly”. Official auditor Comptroller and Auditor General (CAG) in its report on the 2G spectrum allocation, which was tabled in Parliament recently, named several companies including Anil Ambani-led Reliance Communications, as beneficiaries of the spectrum scam that is estimated to have caused the Government exchequer a loss of Rs 1.76 lakh crore.
Among the other industrial houses that benefited from 2G spectrum policy were Unitech, Datacom (now Videocon), S-Tel, Swan and Loop Telecom, which were given licences in January 2008.

On the issue of spectrum allocation to existing operators beyond the contracted quantity of 6.2 Mhz, CAG has found Sunil Mittal-led Bharti to be the biggest beneficiary, among private players, with 32.4 Mhz in 13 circles, followed by Vodafone-Essar with 19.6 Mhz.
The auditor has pegged revenue loss on account of new licences at up to Rs 1.40 lakh crore besides 36,993 crore on account of additional spectrum allotment to the existing operators.
The sensational CAG report and the political brawl that followed, also led to the resignation of Telecom Minister A Raja. Besides CAG, investigating agencies like Central Bureau of Investigation (CBI) and Enforcement Directorate are looking into the scam. The scam has also raised a political storm with the Opposition Parties stalling Parliament and demanding a Joint Parliamentary Committee (JPC) to probe the matter.

Corporate Executives Accused
A charge sheet was filed by the CBI in the Special Court and following corporates were named as accused and charges were framed against them by the Special court Executives | Corporates | Designation | Status | Sanjay Chandra | Unitech Wireless | Former MD | Taken into custody by CBI on 20 April 2011, granted bail on 24 November 2011. As of August 2012, trial is being conducted in Special CBI Court. | Gautam Doshi | RelianceAnilDhirubhai Ambani Group | Group MD | Taken into custody by CBI on 20 April 2011, granted bail on 24 November 2011. As of August 2012, trial is being conducted in Special CBI Court. | Hari Nair | RelianceAnil DhirubhaiAmbani Group | Senior vice-president | Taken into custody by CBI on 20 April 2011, granted bail on 24 November 2011. As of August 2012, trial is being conducted in Special CBI Court. | Surendra Pipara | RelianceAnil DhirubhaiAmbani Group | Senior vice- President | Taken into custody by CBI on 20 April 2011, granted bail on 24 November 2011. As of August 2012, trial is being conducted in Special CBI Court. | Vinod Goenka | DB Realty & Swan Telecom | Promoter and managing director | Taken into custody by CBI on 20 April 2011, granted bail on 24 November 2011. As of August 2012, trial is being conducted in Special CBI Court. | Shahid Balwa | DB Realty & Swan Telecom | Promoter | Taken into custody by CBI on 8 February 2011, granted bail on 29 November 2011. As of August 2012, trial is being conducted in Special CBI Court. | Asif Balwa | Kusegaon Fruits and Vegetables | Director | Taken into custody by CBI on 29 March 2011, granted bail on 28 November 2011. As of August 2012, trial is being conducted in Special CBI Court. | Rajiv Agarwal | Kusegaon Fruits and Vegetables | Director | Taken into custody by CBI on 29 March 2011, granted bail on 28 November 2011. As of August 2012, trial is being conducted in Special CBI Court. | Sharath Kumar | Kalaignar TV | managing director | Taken into custody by CBI on 20 May 2011, granted bail on 28 November 2011. As of August 2012, trial is being conducted in Special CBI Court. | Ravi Ruia | Essar Group | Vice-chairman | Not taken into custody yet. As of August 2012, trial is being conducted in Special CBI Court. | Anshuman Ruia | Essar Group | Director | Not taken into custody yet. As of August 2012, trial is being conducted in Special CBI Court. | Vikas Saraf | Essar Group | Director for strategy and planning | | IP Khaitan | Loop Telecom | Promotor | |

Supreme Court Verdict in the 2G Spectrum Case

On 2nd February 2014, Supreme Court cancelled 122 licences granted during Raja’s tenure and SC described the 2G spectrum allocation was granted in an ‘unconstitutional and arbitary’ manner. SC asked the Telecom Regulatory Authority of India (TRAI) to recommend a new process for allocation of licenses, along with guidelines for an auction of spectrum.
Supreme court also said that auction cannot be the only method of allocating natural resources, it should be considered on a case-by-case basis.
Huge profit to a company Auction only.

SC emphasised that earning maximum revenue is secondary to serving the public good in allocating natural resources, but if allocation of a particular resource is going to get sudden huge profit to a company, then such resource should be allotted through auction only. (for example 2G spectrum).

Presidential reference on SC verdict
After above verdict of Supreme court, Government decided to get clarification, on whether should every natural resources (coal, gas, petroleum, water etc) be allotted through auction only. (although technically “Spectrum” is not a natural resource, it is generated because of man made satellites.)
Through Article 143 of the Indian constitution, the president can refer matters of public interest to the Supreme Court and seek their opinion. This is known as “Presidential Reference”.
Here, first the Cabinet headed by PM approves a resolution that “WE need to send presidential reference in this xyz matter.”

Supreme court on Presidential Reference
Supreme court said auction cannot be the only method of allocating natural resources, it should be considered on a case-by-case basis.
Earning maximum revenue is secondary to serving the public good in allocating natural resources.
But if allocation of a particular resource is going to get sudden huge profit to a company, then such resource should be allotted through auction only. (for example 2G spectrum).
In anycase, all decisions and actions of the government are open to being questioned by the court.
In conclusion, it is observed that despite having themselves sought the opinion of the
Ministry of Law and Justice, the Department of Telecommunications decided to ignore the advice received. The concerns of the Ministry of Finance were also not addressed for reasons which are not convincing. In fact, the directions of the Hon’ble Prime Minister evoked a response from the Hon’ble Minister of Communications and Information Technology on the same day. The letter contained assurances with regard to the availability of spectrum for all applicants as also with regard to the strict adherence to the FCFS policy for allocation of spectrum. The assurances, however, were not adhered to. The methodology for allocation of 2G spectrum, a scarce finite national asset and for which there was an unprecedented demand for allocation, was not deliberated upon by the full Telecom Commission. Audit is of the view that such discussion with different stake holders represented in the Telecom Commission would certainly have benefitted Department of Telecommunications in arriving at a more credible and transparent procedure for allocation as also for ascertaining the true value of 2G spectrum. The entire implementation process does not withstand the test of scrutiny, and hence, the widely held belief that it has benefitted a few operators and has not been able to maximise generation of revenue from allocation of such a scarce resource. This has now been confirmed in Audit. The role of Telecom Regulatory Authority of India would also appear to have been reduced to that of a hapless spectator as its recommendations were either ignored or applied selectively. The entire process of allocation of 2G spectrum raises serious concern about the systems of governance in the Department of Telecommunications which need to be thoroughly spectrum. Owners of these licences, obtained at unbelievably low price, have in turn old significant stakes in their companies to the Indian/foreign companies at high premium within a short period of time. The premium earned by these new entrants to the telecom sector was nothing but the true value of the spectrum, which should have normally accrued to the public exchequer, had the transparent and fair market mechanism been followed for the allocation of UAS licences reviewed and revamped. The fact that there has been loss to the national exchequer in the allocation of 2G spectrum cannot be denied. However, the amount of loss could be debated. To ensure that such lapses do not occur in any Ministry or Department of the Government, there is an imperative need to fix responsibility and enforce accountability for the lapses highlighted in the Audit Report.

Recommendations and Spectrum Reframing by TRAI

Keeping in view the decision taken by the Central Government in 2011, TRAI made fresh recommendations for grant of licence and allocation of spectrum in 2G band in 22 Service Areas by auction, as was done for allocation of spectrum in 3G band.
In 2001, some companies got License + free spectrum (900 Mhz).
They’ve to renew their license in 2014. But now Government has changed its policy. According to new policy, Spectrum is de-linked from License. So you’ve to apply for license separately and you have to purchase spectrum separately (through auction).
Telecom Regulatory Authority of India (TRAI) has suggested that existing mobile operators will have to surrender the spectrum in the 900 Mhz band at the time of license renewal in 2014.

3G Auction became a benchmark

In 2010, 3G and 4G telecom spectrum were auctioned in a highly competitive bidding. The winners were awarded spectrum in September and Tata Docomo was the first private operator to launch 3G services in India. The Government earned INR 69,000 crore from the 3G spectrum auction.
The companies participated in the auction are Airtel, Aircel, Idea, Reliance Telecommunications, S Tel, Tata Teleservices and Vodafone Essar.

3G auctions for a smaller number of licenses had fetched the government a good sum of Rs 69,000 crore. This shows that government has lost money when it comes to 2G allocation. So 2012 onwards Department of Telecommunications is auctioning 2G Spectrum in GSM and CDMA bands. The 1800 MHz band and 800 MHz band are currently being used for GSM and CDMA services respectively.

2G Spectrum auctions

In 2012 The government received bids worth a total of 94.07 billion, far lower than its target of 280 billion from the sale of 2G spectrum in the GSM band. None of the bidders bid for a pan-India spectrum for which the reserve price was set at Rs 140 billion for 5 MHz of airwaves. Out of the 140 blocks of spectrum on offer, 102 got bids. Delhi, Mumbai, Karnataka and Rajasthan circles did not receive any bids.
The companies that participated in the 2012 2G auction are:
Airtel , Aircel, Vodafone, Videocon Telecommunications Limited, Telewings communications Services Private Limited.
Response to the 2013 spectrum auction was poor.

While there were no bidders for spectrum in 1800 MHz and 900 MHz bands, MTS India was the only bidder for airwaves in 800 MHz band. Airtel and Idea were reluctant to participate in the spectrum auction due to steep pricing of the auction airwaves, and also because of their debt levels and weakening cash flow.
In 2014, the Dot auctioned 2G telecom spectrum in the frequency range of 900Mhz and 1800 MHz. The winners were awarded spectrum in February. The Government earned 612 billion from the spectrum auction. The private companies which participated in the auction were:
Airtle, Aircel, Vodafone, Videocon Telecommunications Limited, Telewings communications Services Private Limited, Reliance communications, Reliance Jio infocomm, Tata Teleservices.
2G spectrum had to be auctioned afresh after the Supreme Court ordered in 2012 the cancellation of 122 licences issued in 2008 by then Telecom Minister A Raja. The Supreme Court held that the process used by him to allot licences was "illegal" and ordered a new auction. Auctions in November 2012 and March 2013 flopped as most bidders stayed away from the sales, complaining that the floor bid prices were too high. The eight bidders applied to participate in the 2014 auction after the government sharply cut auction reserve prices.

Can we prevent licensing scams??

Whenever misgovernance happens, as in the case of 2G spectrum scam, remedial action be taken by the concerned people.
For the future, we need a law that prohibits the misuse of power apparent in so many allocations of natural resources and licences of all sorts. We need a law that lays down that no government permit or licence shall be granted save on the basis of an auction, of which the full details and documentation are available to all, at least three weeks in advance. But an auction raises costs, and can mean that the winner has to charge high rates to earn back his auction bid. If government intends to keep public prices low, licences can be distributed free of charge by lottery to pre-qualified candidates that will also be corruption-free. Any government allocation should be transparent and should avoid legal problems and a void around.

Of course, a section of politicians and bureaucrats may resist any such law just because It will end their lucrative games they have been playing all through their lives. But it all depends on the unity of the masses in order to bring a change for the welfare of the society and governance. If this reform happens after the 2G scam, it will yield a public dividend several times the size of the scam itself.
From a business perspective, two conclusions can be drawn. The first is a cheering one: India's legal system seems to be working just fine at the very top. The second is less sunny: the mobile-phone industry faces turmoil. There is also a worrying question: is the smell from the telecoms business a sign of a deeper rot?