The Comptroller and Auditor General of India (CAG), in a draft note, has alleged that allocation and usage policies of the government until 2004 benefitted major telecom operators, with a revenue loss of Rs 90 billion to the exchequer. According to CAG, The beneficiaries include Bharti Airtel, Vodafone India, Idea Cellular, Reliance Communications (erstwhile Reliance Telecom), Spice, Aircel, Loop Mobile and Bharat Sanchar Nigam Limited (BSNL).  The Department of Telecommunications (DoT) is currently preparing a response to the allegations raised in the draft report. The final report will be prepared after reviewing the telecom department's response.

In this report, CAG has raised concerns over DoT’s decision for allocating spectrum beyond the 4.4 MHz threshold, which was prescribed in the telecom permits. DoT had decided to allot additional 1.8 MHz of frequency airwaves to Bharti Airtel and Vodafone India after they had reached 400,000 subscribers. Further, Bharti Airtel, Vodafone and Spice were allotted spectrum in the 900 MHz spectrum band, without paying any extra spectrum usage charge (SUC) even as additional spectrum was to be awarded in the 1800 MHz band.

CAG is also concerned with DoT’s decisions on allocating spectrum on subscriber base criteria without prior consultation with the Telecom regulatory Authority of India (TRAI).  In addition, it has raised concerns with DoT for not revising the SUC for spectrum allotted beyond 8 MHz till 10 MHz. The auditor is of the view that if DoT had charged an SUC of at least 1 per cent, the government would have earned additional Rs 13.23 billion till date.