Rajeev Chandrasekhar's Open Letter to Ratan Tata
Dear Mr. Tata,
It is with considerable concern and some confusion that I have watched
your recent Television Interviews and press statements following the
2G scam and the exposure of the infamous Nira Radia Tapes.
I, as countless other Indians, have held the house of Tatas in great
esteem and respect – have seen them as being different from so many
other Indian corporates that play by a different set of rules and
values. I, along with many Indians, consider JRD Tata as one of the
true builders of modern India.
to write this open letter to you. I trust you will not consider this
as personal, since my letter has to do with issues of principle and
conduct that are disturbing.
In your recent press interactions, you have made the point that the 2G
scam needs to be investigated and have made several sub-points,
1. Out-of-turn allocation of spectrum;
2. Hoarding of spectrum by incumbent operators; and
3. Flip-flop of Policy
Let me wholeheartedly agree with you. Many in media and public life
including me, have been saying this for several years now, so your
belated realization of these critical issues is very welcome.
I sympathize with your concern about public-policy making in our
country sometimes resembling that of a Banana Republic. But the forces
behind this are helped considerably by the fact that people with power
and influence remain silent and passive spectators to this. So many
including I would have welcomed your intervention much earlier, as in
the case of the alleged bribing offer 15 years ago, of Rs 15 Crores
that you referred to only recently. You will agree that speaking out
against corruption is most effective when it is happening and not
decades or years later. Because then it becomes an intellectual post
mortem, and not active resistance.
Since I was previously a telecom entrepreneur, there will be a
temptation for those that advise you, to attribute agenda and
motivations to this letter of mine. But I assure you that there is
none. I write because I believe that there is a need to join you in
this debate and necessarily bring to your attention the contradictions
between your stand and the position of the Tata Telecom companies,
that you may be unaware of, given your senior position in your
1. Out-of-Turn Allocation of Spectrum
According to the CAG Report, the potential loss to the Exchequer on
account of dual technology licenses at 3G rates is Rs. 37,154 crores.
By virtue of dual technology - according to the CAG – your company has
caused a loss to the Exchequer to the tune of approx. Rs. 19074.8
But it is not just this. It is a fact that the Tata Group is a
beneficiary of out-of-turn spectrum. In fact, one of the biggest of
It is a fact admitted by the Government on affidavit that 575
applications were received for 2G spectrum by 01 October, 2007. Using
an illegal and arbitrary cutoff date, Mr. Raja processed only 122
applications received till 25 September, 2007. 110 were rejected and
343 applications were put in abeyance. Given the fact that there is
no 2G spectrum available, these applications received till 01 October,
2007 (within the date represented by the Government) have now been put
in the dustbin. In fact, the TRAI had already recommended on 11 May
2010 that no more UASL license with bundled spectrum can be given.
This means that these 343 applications will never be processed and
will never see spectrum.
In the meantime, 19 days after these 575 applications were received,
the dual technology policy was announced through a press release by
Mr. Raja. The Tatas put in their dual technology applications around
22 October. So, in effect, their application went in three weeks
after the 575 2G applications were received.
Today, Tatas already have GSM spectrum allocated and GSM service
launched in most of the circles – But the 343 applications submitted
three weeks before the Tata Group have neither been processed nor have
any chance of ever being processed – so much for First Come, First
You will accept that this seems to be a case of arriving late, forming
a new queue, jumping the priority and accusing others of getting
priority on spectrum allocation and meets your point of out-of-turn
allocation of spectrum. I am sure the 373 applicants who were rejected
for no fault of theirs, will agree - while the Tata Group has sold its
equity for billions of dollars to NTT Docomo based on its out-of-turn
GSM allocation on dual technology policy.
In my humble opinion, evidence suggests that the Tatas have benefited
from out-of-turn spectrum allocation. The dispute between Tatas and
Reliance Comm inter se on the allocation sequence cannot dilute the
primary fact of bypassing other early applicants to this spectrum.
2. Hoarding of spectrum by incumbent operators
This is an important point you have raised. I concur with you that
there is a need for Telcos, old or new, to pay market rates for
spectrum. I also completely agree that the subscriber linked criteria
allocation of spectrum is flawed and is encouraging fudging and false
subscriber numbers. But I bring to your attention, that this is
existing Government policy – flawed or unfortunate as it may be, and
the only solution to this is to replace this with a new policy.
If by hoarding, you mean having more spectrum than number of
subscribers that can be serviced – then please note that Tata holds
spectrum both for GSM and CDMA. Based on the spectrum that Tata has,
its average efficiency is perhaps the lowest amongst the large
operators. Equally, that the CDMA spectrum that Tata holds is 3-4
times more efficient than the GSM operators – by its own admission,
which I recall during the WLL scam. Moreover, Tata has received CDMA
and GSM spectrum at 2001 rates. So even if the hoarding charge was to
apply, it would also apply to the Tatas for having maximum cumulative
efficiency (CDMA and GSM) to serve the least number of subscribers
amongst the incumbents.
Again, I fully support the need to price spectrum beyond 6.2 MHz with
incumbent operators at market rates. But the charge of hoarding that
you make applies equally to Tata Tele – whether it is total spectrum
held, or subscribers served based on that spectrum, or price paid to
acquire such spectrum, vis-à-vis the cumulative efficiency of CDMA and
3. Flip-flop of Policy
In your interview, you have pointed out that a lot of the current
dysfunctionality in Telecom has arisen from Policy changes and
flip-flops. You would recall that one of the most horrific distortions
of Policy was the infamous WLL scam in 2001– where Telecom companies
with Fixed service licenses managed to muscle their way into cellular
with active support of Policy makers of that time – and not to forget
that it was all done in the name of benefit to the common man!
recommendations by the TRAI and Government allowed this illegality to
be regularized through the UASL policy, opening the gates to
unprecedented and unique (and unheard of) First Come, First Served
form of licensing - bypassing tenders (a form of auction) that were
the norm for obtaining cellular licenses till then.
Your company was the beneficiary of this 'policy flip-flop' and you
chose to accept the benefits of this flip-flop at that time - despite
this blatant violation and distortion. I am personally aware because I
led the fight against it and remember being immensely disappointed at
the Tata Group's remarkably self-serving position. Further, in one of
the most mysterious and indefensible acts, Tata Group took on board as
a consultant, the very individual, who as the Chairman of TRAI was the
architect of this UASL and other shames.
So in summary and respectfully, your positions in the recent
interviews seem to be in stark contrast with the actual conduct,
performance and position of Tatas' Telecom companies in each of the
three points you have raised.
There are several other questions that deserve answers, including why
a group like Tata with its sterling character and reputation requires
outside lobbyists to lobby on their behalf! That, in itself, is enough
to shatter one's confidence!
distract from the many achievements of the Tata Group including the
acquisition of International Brands like Land Rover, Jaguar and its
increasingly global footprint. But I believe, on behalf of many
erstwhile supporters of the Tata group, that it is my duty to seek and
spotlight the truth. The Tata Group has a responsibility, and indeed,
owes it to its many admirers in India to actually live up to its image
of ethical conduct, otherwise your statements and actions will seem to
be hypocrisy – something that's already available in plenty in our
public and corporate life.
Member of Parliament
06 December, 2010
Nevertheless, I promise to keep my response dignified and steadfastly refuse to fall to your level of personal attacks.
On facts, your letter is not just exceptionally weak, but in fact, refuses to engage on the issues that I had raised - the yawning gap between what you say in public and what your companies do. While those remain unanswered, I will certainly reply shortly with my response. I promise to rebut your allegations, claims and innuendo - chapter and verse in the public domain.
Member of Parliament
09 December, 2010