The Department of Telecommunications (DoT) is working on a proposal to compensate government agencies from the Consolidated Fund of India for the vacation of spectrum that will be used for commercial purposes.
Defence forces, besides the ministries of space and information and broadcasting, are the main entities which use spectrum. The proposal may find its way into the New Telecom Policy-2011 that the department is drafting.
“The government agencies,” says an internal note from the department, “are the major users of the spectrum which is required for commercial use. The agencies may be suitably compensated from the Consolidated Fund of India to ensure vacation of spectrum through migration to other bands.”
The refarming of the spectrum needs to be done after the vacation to ensure the usage of the spectrum with advanced technology for various wireless services.
Since it will be difficult to estimate the amount of refarmed spectrum, the size of the fund also will be worked later, according to a senior DoT official. “This will be decided after the formulation of the policy. The required funds can be requested from the consolidated fund of India,” he told Business Standard.
Currently, there is no such mechanism of compensating the users of spectrum for vacation. The Cabinet approval was taken for setting the OFC network, after which the defence forces would move to a different band of spectrum.
The DoT had earlier asked for the vacation of additional 80 MHz from the defence services to meet the needs of telecom industry. The vacation of spectrum, it had said, may generate additional revenues of about Rs 80,000 crore on the basis of prices discovered through the spectrum auctioned last year.
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Defence forces had already agreed to release 150 MHz of spectrum in 1,700-2,000 Mhz band. An additional spectrum of 80 MHz is also required, without which the growth of 2G and 3G services will be hampered, the department had said.
The telecom industry is already facing a spectrum scarcity. According to telecom regulator Trai, the total requirement of spectrum in the next five years would be around 500-800 MHz, including 275 MHz for voice services alone. On the other hand, the availability of spectrum is only to the tune of about 287 to 450 MHz.
State-run telecom major BSNL, on behalf of DoT, is setting up an optical fibre network (OFC) in lieu of the vacation of spectrum by defence services. The defence ministry has already vacated 15 MHz 3G spectrum, which was auctioned last year. It has also vacated 15 MHz 2G spectrum, which has been allocated to new operators.
The further release of spectrum will be done after various completion stages of the OFC network, which is estimated to cost over Rs 10,000 crore.
DoT is also in the process of formulating a new Spectrum Act, which will seek to give powers to the government to withdraw or cancel the unused spectrum assigned to the service providers.
The DoT has set up a committee to formulate a Spectrum Act. The formulation of the legislation came in the wake of controversies related to the allocation of spectrum to the new players in 2008 at a price fixed in 2001. This, according to the CAG, caused the exchequer a whopping loss of Rs 1.76 lakh-crore.