Considering the astronomical magnitude and economic implications of the 2G spectrum scandal and the political and parliamentary turmoil through which the country is passing, after it was unearthed and laid bare for all the world to see, it is only natural for academic institutions, think-tanks and the media round the world to try to get to the bottom of it with hundreds of articles, editorials and commentaries.
Transparency in allocation
One of the articles reveals how valuations of telecom spectrum “are prone to huge margins of error, and depend on a variety of factors including the general economic climate, the extent to which markets for telecom services develop and the ability of individual companies to maximise opportunities.” According to experts on bidding strategies, it is not unusual for the telecom spectrum auctions in the US to fall far short of market valuations. The three recent US spectrum auctions raised a combined $55 billion, while even the most conservative estimates put the valuation at $500 billion. At the same time, the article says that governments “have to leave something on the table for buyers and not extract all the value” through spectrum auctions. “Nobody actually broke the law (in the US auctions, but) they may have done things that are not considered ethical.”
It would seem that while transparency in spectrum allocation processes is desirable, it has its downsides as well. In the past three sets of auctions of telecom spectrum in the US over the past decade, bidders knew who the others in the fray were and what each player bid in previous rounds (in multiple-round auctions). The article says that transparency could actually hurt competition. “If you as a small bidder see that all the big players are bidding on a particular spectrum, you are unlikely to participate”. Taking advantage of that sentiment, the bigger companies tend to bid on “lots of frequencies where they really had no interest because they didn't want the smaller players (to get involved).”
It further transpires that several bidders in the US auctions have also resorted to questionable practices like creating dummy small companies when the regulator provided incentives for small bidders including price discounts. This was sought to be stopped by enforcing a long enough lock-in on spectrum allocations to ensure that smaller players stayed in the business, but many eventually turned over their bandwidth to the larger companies. The article recommends “careful design” of bidding processes to prevent abuse or other downsides. “Design shouldn't be just off the shelf; they should involve people who know the industry.”
Many articles scathingly refer to the ubiquitous nature of corruption and the involvement of the media in ‘murky deals'. The phenomenon of crooks and criminals being elected to legislatures and taken into Cabinets has been universally condemned as the most shameful aspect of India's democracy. Most shocking is the willingness of all sections of the society to view corruption, not as a deadly scourge, but as an acceptable practice. As an article sums it all up: “The solution to the problem of corruption of public officials lies absolutely with the public. The kind of leaders and policy makers that people demand ultimately determine who gets to make the rules by which society functions.”