2G spectrum auction will be open to new players

The Telecom Commission has taken decision on crucial policy issues, including opening up the proposed auction for 2G spectrum to new players.

The Commission has also agreed to recommendations given by the telecom regulator on spectrum sharing and unified licensing.

2G auction

The Department of Telecom is planning to hold 2G spectrum auction in a bid to determine market price for airwaves. There were concerns that this auction could be limited to existing players in which case the spectrum price could be kept down. Price from this auction will be used to fix the one-time fee for existing players.

According to the Minutes of the Meeting of the Telecom Commission, all operators with more than 4.4 Mhz of spectrum will have to pay a one-time fee. The fee will be imposed with prospective effect and will be based on the auction price.

The Commission has also proposed to impose a retrospective fee for spectrum used until now from the time it was allocated. This fee will be based on the 3G auction held in 2010. Price of spectrum in 900 Mhz will be 1.5 times that of spectrum in 1800 Mhz. This will mean a huge pay out for incumbent players.

The Commission has also proposed to cap the maximum spectrum at 10 Mhz for each operator in Metro areas and at 8 Mhz for other circles. Once implemented some of the operators such as Airtel and MTNL could be asked to give back airwaves as they have over 10 Mhz in a few circles.

Spectrum sharing

On the issue of spectrum sharing, the Commission has said that spectrum sharing will be permitted as long as both the players have airwaves. The operators will also have to pay spectrum charges on the combined quantity. For example, if two operators with 4.4 Mhz each decide to share spectrum then they will have to pay charges applicable for 8.8 Mhz.

But the Commission has decided that 3G spectrum cannot be shared. This comes as another blow to the operators that are fighting the DoT on roaming issue since none of the players own pan-Indian 3G spectrum. The operators were hoping to use ach others spectrum once sharing is permitted.

The Commission has suggested that if the Government has additional spectrum beyond the auction then it can allocate the same to existing operators that have already applied for additional airwaves. The criteria for allocation will be based on the date of application and the category.

Operators, which are yet to get airwaves in part of a circle, will get the first priority. Second in line will be those players such as Reliance Communications that have been given initial start-up spectrum of 4.4 Mhz and are waiting for additional airwaves till 6.2 Mhz.

Third in line are those operators that have paid for spectrum in a circle but haven’t been given airwaves. Tata Teleservices will fall in this category as it has paid for Delhi circle but it hasn’t got spectrum. And if there is more spectrum then other players that want more than 6.2 Mhz will be given. But all these players will have to pay a price once it is finalised through the auction.