In a move that will provide a huge advantage to old GSM operators and impact the valuation of new entrants in the telecom sector, spectrum allotment beyond 4.4 MHz will now be done through an auction, though older players were spared such additional charges till they had 6.2 MHz.
"Telecom commission has decided to charge new operators. For additional spectrum beyond 4.4 MHz, telcos have to buy additional airwaves through auction," according a person with direct knowledge of the matter.
Recently, new telecom operators such as Tatas, RCom (for foray into GSM services), Sistema-Shyam, Uninor and others have written a letter to Telecom Minister Kapil Sibal terming the proposal to charge new telcos for additional spectrum beyond 4.4 MHz as discriminatory, saying it will impact their sustainability and scalability.
The regulator Trai has been mulling charging operators for additional 1.8 MHz (GSM)/2.5 MHz (CDMA) spectrum, beyond the start-up spectrum of 4.4 MHz/2.5 MHz respectively.
Any change to the already existing contractual arrangements with regard to allocation of additional 1.8 MHz/2.5 MHz will be highly discriminatory, against the level playing field and likely to derail business plans, the new operators had said.
Citing various TDSAT rulings and views of DoT and Trai at various times, the operators said 6.2/5 MHz is considered the contractual minimum and the optimal quantity of spectrum for pan-India GSM operations.
The operators had said that such changes would be in violation of the present licence conditions.
Further, saying that any changes to the contract were not legally tenable, the operators have asked the government to re-consider the proposal and seek legal opinion on the same, before passing any final decision.
According to new players, they should be given more concessions in view of limited market as the old players have already cornered maximum spectrum as well as subscriber base.
Any move to charge for spectrum beyond 4.4 MHz from new operators would send a wrong signal to the global investors as they have entered Indian market based on licence conditions and business models of incumbent players.