Friday 14 November 2014

Reliance Jio looting India by bribing Politicians

When 4G licences were auctioned, the condition was 4G would be used only of data, not voice. So many players did not bid for 4G. The 4G auction fetched very little revenue for India. Mukesh Ambani’s Reliance managed to get hold of a 4G license across India via. Infotel.
After the auction was over, the Indian government said that it will allocate “unified license” retrospectively. This means Reliance can use 4G for voice, even though Reliance had paid only for data. So Indians suffer a huge loss; thousands of crores are transferred to Mukesh Ambani’s Reliance as profit.
The major steps in this corrupt deal were:

  • 4G auctions are setup with only data transmission allowed, no voice. So major players like Airtel, Vodafone, etc did not bid aggressively. The spectrum is sold for a paltry sum.
  • Government monopolies (BSNL and MTNL) are allowed 4G spectrum.
  • Infotel Broadband won all India 4G spectrum for Rs 12,750 crore. Reliance Jio bought Infotel Broadband and thus got this spectrum.
  • BSNL and MTNL withdraw from 4G spectrum, giving Reliance Jio a monopoly.
  • Reliance Jio is now allowed to transmit voice along with data in 4G.

If this was not enough, now Government wants Reliance to pay 1 to 2% of its annual revenue as tax, while other network operators (Vodafone, Airtel, etc) pay 5%. Reference.

Also, India has 15MHz of 3G spectrum that can be auctioned in Feb 2015. But the government is auctioning only 5MHz. The rest 10MHz will be kept idle. This is done to create an artificial scarcity in 3G. This will drive up 3G prices, to the benefit Reliance 4G. Also Government (via DOT) has made intra-circle pacts between Telecom illegal. So this means that Reliance 4G will be able to offer pan India service, but 3G operators will be able to operate only in selected states. This will drive customers, who travel across India (i.e. most profitable businesses), to Reliance 4G at the loss of 3G operators. Reference.

The Congress led UPA government favoured Reliance and now BJP government is favouring Reliance.

What should Indians do?
Indians should avoid taking the services of Reliance Jio because it has cheated Indians. Instead, Indians should use 3G of Vodafone, Airtel, etc. because these companies have won spectrum in open auction. This will pressurize companies to act more honestly. Also, Indians should not vote for Congress/BJP in next elections unless they stop favouring Reliance.


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