Tepid response to 2G spectrum due to mkt saturation: CPI(M)

CPI(M) today countered the government's attack on CAG using the tepid response to 2G spectrum auction, saying it was due to saturation of demand for it and the availability of 3G spectrum in the market.

The party also charged the government and the corporates with "collaboration" and having "vested interest" in keeping the 2G auction prices low. Countering the government which blamed the CAG and the opposition's "sensationalism" about the huge notional loss to the telecom sector due to 2G spectrum allocation, senior CPI(M) leader Sitaram Yechury said "a lot of false propaganda" was being carried out about CAG's estimation of losses of Rs 1.76 lakh crore due to 2G spectrum allocation in 2008.

Maintaining that the scenario in 2008 and the one prevailing now were completely different, he said the lack of response in the latest round of auction was firstly due to the "virtual saturation of demand" in mobile phone service market which had 300 million subscribers four years ago and now has 900 million.

The other major factor was that 3G spectrum, which was not in existence in 2008, is available now and 4G is also going to be in place soon, Yechury said.
"Both the government and the corporates have vested interest in keeping the (2G spectrum) prices low. They want the auction of excess spectrum to be held in low prices. The lower the prices, the better it is for the corporates. It is a collaboration between the government and the corporates," he said.

The CPI(M) leader said the government could have got better prices had it waited for some more months as the market would expand "only when data accessibility (on mobiles) increased. Now mobiles are used more for voice facilities."

Yechury's comments came as Telecom Minister Kapil Sibal said the Empowered Group of Ministers, headed by Finance Minister P Chidambaram, will meet soon to decide on price and date for auction of spectrum in circles like Delhi and Mumbai.