Saturday, February 12, 2011

Behind the S-band spectrum scandal

Every well-informed schoolchild knows this is rising India's Age of Uninterrupted Scams. No government before the present United Progressive Alliance regime has had to deal with such a dizzying succession of exposés of corruption scandals — 2G spectrum, the Commonwealth Games, Adarsh Housing, money laundering, and the rest that have come tumbling out. The latest in the series is the Indian Space Research Organisation's deal — hatched in secret and sought to be covered up over a period of six years — to launch two customer-specific satellites and give away 70 MHz of high-value S-band for unfettered commercial exploitation at a scandalously low price of just over Rs 1000 crore to a private company, Devas Multimedia Private Limited. The transaction and its implications were first exposed by Business Line, the business daily of The Hindu group, in a detailed report published on May 31, 2010.

Despite Telecommunications Minister Kapil Sibal's defence of the indefensible, enough is known about the 2G spectrum allocation scam to place it at the top of the list of independent India's corruption scandals. But what is the essence of the S-band spectrum deal concluded in January 2005 between ISRO's commercial arm, Antrix Corporation, and Devas Multimedia which, it turns out, was born of an incestuous relationship with India's space programme? The agreement (the full text is available under Resources at relates to two customer-specific satellites, GSat-6 and GSat 6-A, which ISRO is contractually committed to design, build, and launch in order to make available to Devas the S-band spectrum for commercialising a range of multimedia, broadband services across India. What is special about the S-band, which is defined as radio waves with frequencies that range from 2 GHz to 4 GHz? According to “The 2.6 GHz Spectrum Band: Unique Opportunity to Realize Global Mobile Broadband,” a 2009 report prepared for the GSM Association: “As mobile voice and data traffic increases, wireless operators around the world will require additional spectrum. However, as a finite public commodity, few bands remain available for new allocation to mobile wireless services and even fewer exist for global harmonisation of wireless spectrum assets. The 2.6 GHz band is one exception. The 2.6 GHz band (2500-2690 MHz), sometimes also referred as the 2.5 GHz band, was allocated by the World Radiocommunication Conference (WRC) in 2000 for terrestrial mobile communications services. The band provides an opportunity to meet rapidly rising demand for capacity to deliver mobile broadband services on a widespread, common basis across the world.”

Armed with secret knowledge of what ISRO could do for it by launching customer-specific satellites to make available at a throwaway price a large chunk of S-band spectrum, Devas Multimedia — a venture founded in 2004 at the initiative of former officials of the Indian space programme and involving foreign investors — thought it had struck gold. In July 2008, it even sold a 17 per cent stake to Deutsche Telecom AG for $ 75 million (around Rs. 318 crore at the time) and over the next year was clearly looking forward to a time of unrivalled growth in valuation. According to a preliminary estimate by the Comptroller and Auditor General of India, whose search for the relevant documents within the Department of Space has been actively obstructed, the presumptive loss of revenue to the government in the event of the Antrix-Devas deal going through now would exceed two lakh crore rupees (approximately $44.4 billion).

ISRO and the Department of Space have scored many successes and enjoyed a good, clean reputation over the decades. Fortunately, in late 2009 some outraged insiders blew the whistle on the secret deal — so secret that ISRO's chief, K. Radhakrishnan, had to admit at a press conference on February 8, 2011 that for reasons that were being “reviewed” internally, ISRO failed “explicitly” to inform the Union Cabinet that GSat-6 and GSat-6A were customer-specific satellites that would be “predominantly used for a novel and commercial application developed by Devas Multimedia in association with global experts.” Towards the end of 2009, thanks to the whistle-blowers and perhaps not unrelated to the stink raised by the 2G spectrum allocation scandal, a view began to form at the top levels of ISRO that the Antrix-Devas deal must be annulled. The Space Commission also wanted the deal to be annulled and the Prime Minister was informed on an indeterminate date.

But nothing much happened until Business Line published its report in May 2010, which the CAG followed up conscientiously despite the bureaucratic hurdles placed in its path. Among the concerns registered by the CAG in its process of enquiry were the following: S-band spectrum was being given away without inviting competitive bids; organisational control systems were not followed; the Prime Minister's Office, the Cabinet, and the Space Commission were not properly informed about the contract details; public resources were being diverted to building two customer-specific satellites; and the contract terms deviated from the terms of previous contracts entered into by ISRO and Antrix. To cut the story short, the publication of the results of the special Business Line investigation, backed up by documents and other reliable evidence, in The Hindu and Business Line has brought the CAG's commendable efforts to light — and placed the nature, scale, and modalities of the S-band spectrum scandal on the public agenda. True to form, those at the receiving end have questioned the accuracy of the media reports or suggested they are overblown. It is a matter of satisfaction that the deal now seems to be heading for annulment — but no thanks to due diligence and oversight by a central government whose procrastination, lack of transparency, obfuscation, and indeed delinquency in this affair have shocked the nation.


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