I wrote in this column on February 7 about the Supreme Court’s judgment regarding telecommunications licences. I return to the subject because the course of events points towards an outcome that in my opinion would constitute a grave injustice. I have been impelled to visit the subject again because no one that has access to the Supreme Court is prepared to contest its judgment or the underlying logic, let alone suggest to it that its judgment would do injustice and needs to be replaced by something more just and reasonable.

The judgment is a long one; it goes into many tangential facts and issues such as the laying of a telegraph wire between Calcutta and Diamond Harbour in 1839. It is impossible to do justice to such a lengthy and wide-ranging judgment in an article of 1200 words. Let me therefore follow the honourable court’s own summary.

1. “The licences granted to the private respondents…. pursuant to two press releases issued on 10.1. 2008 and subsequent allocation of spectrum…. are declared illegal and are quashed.” The question needs to be asked: what was wrong about the press releases that made the licences illegal? It can only be that the process of giving the licences was arbitrary and devoid of any principle of fairness. The telecommunications ministry called for applications, and arbitrarily closed the invitation within a few days. The minister’s favourite applicants had been warned in advance, and managed to put in their applications within that time; the rest were excluded. Should they therefore be deprived of the licences? The Supreme Court is too late: many of those licences have been sold, some many times over. The original licensees got undeserved benefit; but that is not true of subsequent buyers: they paid the market price, which is as close as one can get to fairness at any point of time.

If it wants to go in this direction, the Supreme Court should quash every transaction in those 122 licences at any time since their first issue. And to be fair, it should ask every buyer in the transaction to repay to the seller whatever price it paid, plus interest. Many of the buyers were foreign and are beyond the Supreme Court’s jurisdiction. It can order them to compensate the sellers. Some may, others will not, because the Supreme Court cannot punish them. It can approach the courts of their home countries to carry out its judgment. But many will take the view that the judgment is not supported by their own law, and refuse to help the Supreme Court. If one accepts that this will be the outcome, then one must — the Supreme Court must — conclude that it does not have the power to do justice. This is not unusual; it often happens. For example, a murderer may die and may no longer be available for hanging. In such cases, courts just accept what has happened and move on. In this particular case, the Supreme Court should accept the fact that its jurisdiction does not extend beyond the borders of India.

2. “[After four months,]…. TRAI shall make fresh recommendations for grant of licence and allocation of spectrum…. by auction...” The reasoning behind this order is that the spectrum was wrongly allocated in 2008 and must be re-allocated fairly, and that auction is the fairest way of allocating it.

My previous reasoning shows that the licensees who got the spectrum unfairly in 2008 are largely beyond the Supreme Court’s power to punish, and that the current holders of spectrum are not guilty and must not be arbitrarily deprived of spectrum. It follows that there is no spectrum to re-allocate or auction; the Supreme Court would do well to drop this idea. If it is still convinced that auction is the only right way of spectrum allocation, it should expropriate all spectrum and get it auctioned, including the spectrum allocated before 2008. That means not just the spectrum serving the 8 crore customers of the 122 operators, but the 92 crore customers of all operators. People may use the 3-odd crore fixed telephones still being operated by the two government companies; but for the rest, all telephone conversations must end. That 92 crore is an overestimate; it contains many defunct telephone connections that the telecom companies have not cancelled, and some playboys who have multiple mobiles. But even discounting them, roughly three-quarters of the people have mobile telephones; they must forthwith stop talking. If the Supreme Court is serious, the country must go back to the primitive 1970s, when we used to queue outside shops to get to a telephone.

3.The Supreme Court disapproves of the way spectrum was allocated to the 122 operators. This, however, involves viewing the issue with blinders on. Telecom spectrum is a small proportion of the available spectrum. The Indian national frequency allocation table covers a range from 9 kilohertz to 202 gigahertz. It is allocated by the wireless planning and coordination wing of the telecommunications department. One only has to look at it to see how arbitrary and chaotic the allocation is. A big chunk is hogged by the armed forces, which even in war would not need 1 per cent of what they are sitting on. Most of the rest is also very little used. If the Supreme Court applies rational principles to frequency allocation, it will find that spectrum does not need to be allocated — that there is plenty of spectrum available for telecommunications.

4. Finally, the Supreme Court’s faith in auctions. It believes that is what economics favours. There is nothing holy about economics; it must make common sense. Auctions are a fair way of allocating scarce resources provided that there is competition in all related markets, and that market price is the right price to charge.

Should users of telephones pay market price of spectrum? The answer does not come from economics; it is a value judgment. The government argues that all poor people must get free or close-to-free food. I do not know why it does not argue that they should get a free phone. We are close to it. Tele-intensity at the end of 2011 was 86 per cent. We have 84 crore adults, and 92 crore telephones. If the government gives out another 5-10 crore telephones, every adult would have one. A one-time tax of Re 1 per minute of call will finance those telephones within a month. They would perhaps increase the number of calls by 10 per cent; it is easily manageable within the present spectrum. Spectrum is being priced because the department of telecommunications is greedy. The Supreme Court does not have to feed its greed. It should make the government pass a Right to Telephone Act. It should tell the government to impose a tax on telephone calls such that no operator would be prepared to pay for spectrum. And it should order the government to use the tax proceeds to fund economics lessons for every public servant. Let them go to economists of their choice and pay for the lessons. And let economists compete for the students’ money. If the plan succeeds, it can then be applied to justice.