In an astounding rebuke of powerful political and commercial players in India, the country's Supreme Court today canceled all 2G spectrum licenses issued in 2008, claiming that the conferrals were "totally arbitrary and unconstitutional." As The Times of India reports, India's Central Bureau of Investigation (CBI) found that bribes and rule violations were part of 122 new telecom licenses. Abhimanyu Radhakrishnan of India Times tells us that foreign investors including Telenor (Norway), Etisalat (Abu Dhabi), Sistema (Russia), NTT Docomo (Japan), and others will be affected by the ruling, though these operators held less than 10-percent of market share. Additionally, he says that while the ruling is likely to upset future interest from foreign investors, it's not likely to affect consumers: it will be four months before any operational shutdowns take place, and number portability will not be affected. Still, billions in foreign investments are now in jeopardy.

Radhakrishnan tells us that the ruling sent shockwaves through politics, business, and the national psyche in general, as punishment for fraud is seldom policed in the country. P Chidambaram, former Finance minister in 2008, may be prosecuted as a result of the verdict — and existing players will either have to pay the difference between the "market rate" and their original purchase price, or there may even be a new auction for the spectrum.

The issue is wide-ranging, and Radhakrishnan tells us that the court's verdict will continue to roll out concerning different aspects of the case. As he points out, regardless of the ultimate outcome, this initial judgement is sure to raise red flags for foreign companies that wish to do business in India: as of now, the regulatory risk may be far too high to swallow.

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Correction: We mistakenly reported that A Raja was the former Finance Minister in 2008.