The Telecom Ministry has informed the Public Accounts Committee (PAC) that it has issued show cause notices to 13 companies for termination of their licences, who are stated to be “ineligible” for getting them.

Based on the report of the CAG, the Department of Telecom (DoT) has “issued show cause notices to 13 companies for termination of the 85 new licences issued in 2008. The companies have given their replies which are under examination,” DoT said in its reply to PAC’s questionnaire.

But, the Ministry again rejected the allegation of any notional loss due to issuance of 122 new licences in 2008 and said the premium placed on the scarce resource from the perspective of a producer need not necessarily translate into a loss when seen from the view point of the consumer and public welfare.

“The concept of notional loss when spectrum is given at a price discovered few years earlier has to be balanced with the gains accruing to the consumers and the general improvement in public welfare in the form of faster economic growth,” the DoT said.

The PAC, headed by BJP leader Murli Manohar Joshi, had sent 40 questions to the DoT relating to 2G spectrum scam.

Suggesting that notional loss reported by the audit report should be seen in light of benefit that it has gone to consumers and for public welfare in large in form of quick economic growth.

The DoT said the objectives of the Telecom Policy since 1999 is to increase teledensity and affordability for consumers, while maintaining a level playing field between incumbents and new players as well as revenue accrual for the government.

The Department pointed out that Telecom Regulatory Authority of India (TRAI) has also not recommended any methodology for auctioning 2G spectrum in its report of 2005, 2007 and 2010 related to telecom licences and spectrum allocation.

“Theoretical exercises based on economic modelling are fraught with simplifying assumptions that make the valuations unreliable, and no methodology can therefore be suggested by the Department in this regard,” it said.

DoT pointed out that the CAG has not considered recommendation of Trai made that spectrum in the 800, 900 and 1800 MHz band (presently used as 2G spectrum) should not be subject to auction.

Spectrum in 800 and 900 Mhz bands shall however be subject to auction as and when it is reframed for 3G and future technologies.