When the Indian 2G controversy blew up, I told several people who asked me about it was that there was no longer any point in debating auctions, but that we should put our energies into designing the kinds of auctions appropriate for the desired purpose. Most people (with the honorable exceptions of some of my friends and a recent commenter on this blog) accept that auctions are clean and that other methods are susceptible to manipulation. For good governance reasons alone I support auctions.
That said, conducting an auction for valuable frequencies or for the right to operate a telecom business in conditions of restricted entry (and potential high profits and profile) is no simple matter. Auction design is an esoteric art. It would be foolhardy to embark on designing an auction without specialized help. So it appears the PTA got caught between two contradictory directives: (1) hold the auction in three months or less; (2) go through standard procedures to obtain the services of a consultant. End result, auction postponed.
The first sign of missing the deadline emerged when PTA invited applications for hiring an international consultant by March 26 – just two days before the first auction of Instaphone licence.
The applications were invited quite late as PTA had completed three-fourth of the required work, said an official of the finance ministry. However, PTA alone cannot be blamed for the delay.
According to official documents, ASC committee chairman Dr Abdul Hafeez Shaikh had on January 6 endorsed the PTA proposal to auction the licence without hiring any consultant.
However, industry people later advised the PTA chairman not to take any responsibility and follow the set procedure to ensure transparency, said one of the three people who were informally approached by the PTA chairman to seek advice.
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