Rajeev Chandrasekhar’s open letter to Ratan Tata

In the kerfuffle over the Niira Radia tapes in the 2g spectrum allocation scam, the sanctimonious outpourings of Ratan Tata have been little short of breathtaking: speaking of a bribe 15 years after it was “advised” to him; beating his chest over invasion of privacy; insisting the government had a right to intercept phone calls, etc.

In all these actions, Tata has banked on the superb reputation of the group and blanked out the Tata group’s actions, while taking the high moral ground: like his company’s role in the scam, Radia’s extremely damaging conversations with obvious hints of payoffs to politicians and their kin.

Rajeev Chandrasekhar, the former scion of BPL Mobile with interests in the Suvarna and Asianet groups in Karnataka and Kerala, addresses just those questions in an open letter to the chairman of Tata Sons.

***

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 J.R.D. Tata as one of the true builders of modern India.

So, it is with considerable sadness and dismay that I am constrained 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, including:

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 realisation 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 me would have welcomed your intervention much earlier, as in the case of the alleged bribing offer 15 years ago, of Rs 15 crore 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 organization.

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 crore. By virtue of dual technology, according to the CAG, your company has caused a loss to the exchequer to the tune of approximately Rs. 19074.8 crore.

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 them all.

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, the then telecom minister A. 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 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 Serve.

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 Communications 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 telecommunications companies,  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 Teleservices, 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 GSM.

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.

You will further recall that in 2003, a convenient set of 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.

I reiterate that this letter is not meant to tarnish or disrespect or 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.

Respectfully,
RAJEEV CHANDRASEKHAR
Member of Parliament

***

Cartoon: courtesy Prasad Radhakrishnan/ Mail Today

***

Also read: Has Ratan Tata ruined the Tatas’ brand image?

‘What Henry Ford did then, Ratan Tata has done now

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26 Responses to “Rajeev Chandrasekhar’s open letter to Ratan Tata”

  1. DailyBread Says:

    Rajeev,

    Good questions, I hope Mr. Tata will personally reply (instead of one more press release from Vaishnavi). But I also think that all telecom entrepreneurs in India need to answer all these questions, why single him out.

    I think telcos will be attacked from both sides, i.e. on one side there will be pressure on Govt/regulator/policy to ask tough questions (to talke care of this they can plant one more Raja in the ministry or who knows the new incumbent Sibal may be a chatterati acceptable version of Raja) and on the otherside consumer who is fed with bad service. Mobile number portability will be a wake up call for some of the entrenched players.

    I would also like to congratulate Mr. Raja. After seeing the circumstances under which he was opearting, IMO he has done a commendable job.

  2. willowinwind Says:

    What do you expect from an opium trading pedigree?

  3. Simple Says:

    Why isn’t BJP raking up muck against Tata with as much vehemence as they did against Raja?

    Why is the media silent about the role of Tata in 2 G scam?

  4. Tarlemaga Says:

    History always states that the first movers have an advantage. They are criminals when laws did not exist. However, once they rake the moolah then they form laws so that other do not break it.

    Whether it was Kennedy’s who were involved in Bootlegging or the the Tatas who were involved initially in Opium trade to China.

    Now they preach the common man on how they got cheated. It’s funny though.

    Life goes on, despite all this as public memory is very short.

  5. Anonymous Guy Says:

    Not to take away from the valid points raised by Rajeev Chandrashekar., but the BPL scion and politician writing an ‘open’ letter on corruption and hypocrisy is much like the pot calling the kettle black…

    If he wants anyone to take his letter seriously, he would first have to give up the MP seat he bought with money/favors paid to Karnataka politicians. But then if a non-MP wrote an open letter to Tata, why would a site like Churumuri print it…

    Ah the hypocrisy that is Indian public life.

    “We have two kinds of morality side by side: one which we preach but do not practice and another which we practice but seldom preach.” – Bertrand Russell

  6. twistleton Says:

    capitalism has no country – (open to interpretation)

  7. Outshine Says:

    Good.Forthright and pointed questions. This open letter deserves an open reply from Mr.Ratan Tata. Hope Mr.Tata will come out with his side of the story.

  8. Bengalooru Haida Says:

    That’s a good set of points by Rajeev C. It would be nice to hear the other side of the story too before burying Tata along side Raja. Let’s not be in a hurry to do that.

    AG,

    I wouldn’t care much about the messenger as long as the message is important and relevant. It’s agreed that this Rajeev guy is no saint but if he has something interesting to say then let’s not hold his deeds against him. Being a long-term telecom man he would have intimate details about the anatomy of skeletons in the cupboard over the last 15 or so years.

    While it’s good for us to know what Raja did to defraud us, it may equally be riveting to know what his predecessors did in cahoots with Tatas, Mittals and other telecom players.

  9. Prasanta Chandra Mahalanobis Says:

    @willowinthewind – Thanks for informing. I did not know this dark period in their history.

    It is surprising that they should be known for integrity in business despite having such a history. This is not the first time Ratan Tata has sullied the Tata name though.

  10. twistleton Says:

    he seems a little sore, if you ask me not to mention sulky :)

  11. Nastika Says:

    Tata did business during British Raj, License Raj.

    They must have pleased the British during their time.
    They must have pleased the babus to get permits & licenses.

    Now in free raj, not all licenses or permits are free. Again they had to please the babus for 2G spectrum.

    PS: I am not questioning Tata’s integrity. I am just stating whats required to do business in India and there is no alternative.

  12. maisuru Says:

    Few questions I would like to ask Rajeev:

    1. How much and to whom did you pay to become an MP ?
    2. Are you feeling sorry that you sold your company much earlier and could not become part of the Telecom bonanza?
    3. What is your pedigree and is it true that you cheated your father in law ?

  13. Doddi Buddi Says:

    I agree with ‘X’ Guy and some what agree with Bangalore Lad. But Rajeev is somewhat disingenuous in claiming somehow Tata did wrong with lobbying when it is well-known that the man himself bought his MP seat from that paragon of non-virtue Dirty!

    Paraphrasing Rajeev, …”There are several other questions that deserve answers, including why a man like Rajeev C with his “sterling character and reputation” seeks a back door entry into the Parliament through the likes of JDS. That, in itself, is enough to shatter one’s confidence in India’s Democracy!…”.

  14. twistleton Says:

    DeeBs!

    Who is this paragon? i don’t know.

  15. Sam Says:

    Ratan slams Rajeev Chandrasekhar for poor homework, says charges motivated and baseless

    http://tata.com/pdf/RajeevChandrasekhar_Letter_081210.pdf

  16. DailyBread Says:

    In India any entrepreneur who has run a Chahada Angadi will tell you the number of things one has to “manage”.I think both Rajeev C and Ratan T should take this fight to a private akhada. No point in washing the dirty linen in public.

  17. Pawan Says:

    Very nice question. But i think Ratan Tata is not solely answerable for this. This is the story of all the politicians and the industrialists.
    after all they all are the two faces of the same coin.

  18. Mino GOmes Says:

    Fireworks in Telecom space – Ratan slams Rajeev Chandrasekhar

    Ratan Tata said that its telecom arm did not get any advantage from former telecom minister A Raja or any other minister. He wrote, “’Your (Chandrasekhar) affiliation to a political party is well known.” Tata said that the motive behind Chandrasekhar’s open letter was only to embarrass Prime Minister Manmohan Singh.

    Read the full letter here: http://tata.com/pdf/Ratan_Tata_Letter.pdf

  19. Anonymous Guy Says:

    DailyBread,

    Better they wash their dirty linen in public. At least we blind fools get to know a little about the way the world works.

  20. DailyBread Says:

    AG,

    >we blind fools get to know a little about the way the world works.

    Sir, kya karenge jaanke? How does it matter to us? who parked in which hotel, for how many days, color of the gown, color of the ideology, etc. etc. Lets move on and enjoy 3G services….

  21. twistleton Says:

    Daily!

    You are displaying true indian fatalism. Be not bitter my friend. There is still hope, especially with optimists like you.

    Like AG says let them wash dirty linen in public, especially since the linen is made by stealing precious fabric in the first place.

  22. Anonymous Guy Says:

    DailyBread,

    I dont see how a little dirty linen washing and us knowing about it will effect our enjoying 3G services in any way.

    But I see what you mean in general and agree with it.

  23. DailyBread Says:

    AG & Twistle,

    I dont think this public spat will do any good to the moral of half million employees of Tata group. Mr. Tata should swallow his pride and fight this battle on some other turf.

    >stealing precious fabric

    Gentlemen spectrum is a public good, hence lesser the spectrum fee better it is for us, the people.

  24. Doddi Buddi Says:

    Among all these letter exchanges, why is our ‘man of letters’ Shri Devegowdaji is silent?

    Any thoughts?

  25. twistleton Says:

    Daily

    You are a true friend of the masses.

  26. twistleton Says:

    ends justify the means my friend?

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