Telcos to oppose move to market-linked prices.
In a major policy shift, the government has decided not to bundle spectrum with telecom licences. At present, 2G licences come with 4.4 MHz start-up spectrum, which later goes up to 6.2 MHz.
Telecom Minister Kapil Sibal today said operators who were given licences in 2008 would have to pay market rates for start-up spectrum beyond 4.4 MHz. The older operators would have to pay market rates for spectrum beyond 6.2 MHz, he said.
“The government would like to make a directional shift from the past practice and bring a fresh policy regarding spectrum,” said Sibal.
Sibal was appointed in November last year after his predecessor, A Raja, resigned in the wake of allegations of irregularities in allotment of 2G spectrum. The case had led to Opposition protests and logjam in Parliament. It was alleged that the allotment caused a huge loss to the exchequer.
“In future, the licence will be in the nature of a ‘unified licence’ and the licence-holder will be free to offer any of the multifarious telecom services. In the event the licence-holder wants to offer wireless services, it will have to get spectrum through a market-driven process,” he said.
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The price will be based on a formula arrived at by the Telecom Regulatory Authority of India (Trai), the sector regulator. Trai is expected to come out with fresh recommendations next week. In its recommendations in May last year, it had linked the price of 2G spectrum to that discovered in 3G auctions. Based on this, the older operators had to fork out around Rs 17,000 crore for excess spectrum, impacting all leading players like Bharti Airtel, Vodafone and Idea Cellular, among others. “There is no way we will pay for this extra spectrum, which we got based on government policy. It is not acceptable to us,” said a senior executive of a leading telecom operator.
The view was echoed by some new operators, which include Loop, Uninor, Videocon and dual technology players like Reliance Communications and Tata Teleservices.
“Our contract clearly says that we will get 6.2 MHz spectrum. Sibal’s views are not legally tenable. Even Trai has made no distinction between the two (old and new players) and has said that spectrum beyond 6.2 MHz has to be allotted at market rates. Sibal has not even accepted Trai’s views,” said an executive of a new operator.
“All operators should be given 6.2 MHz spectrum in a manner that those waiting for start-up spectrum are allotted first. Those who have excess spectrum should also be charged for the same, preferably retrospectively, to bring all operators on a level playing field. Consequent to this, spectrum beyond 6.2 MHz and up to the limits specified by Trai in May 2010 could be charged in line with Trai’s recommendations,” said Deepak Gulati, executive president, Mobility Business, Tata Teleservices. The operators may move the telecom tribunal.
But Sibal seems unfazed. “Given the current level of competition and availability of spectrum, the time has come to review the need to allocate spectrum bundled with the licence at a fixed fee. This policy was adopted to introduce more competition. The stage has been reached where there is enough competition to warrant a market-driven process for allocation of 2G spectrum.”
Sibal said if the licences of some new operators were cancelled for any reason, such as non-fulfillment of rollout obligations, they would have to pay the market price.
This comes a fortnight after Sibal criticised the method adopted by the Comtroller and Auditor General (CAG) to calculate the loss from 2G auctions in 2008. In one formula, CAG used 3G auctions to arrive at the loss figure of Rs 1.76 lakh crore.
Under the new policy, the operators will have to pay a uniform revenue share as spectrum charge to the government. The changes would be part of the new telecom policy being framed by the Department of Telecommunications. Many telecom watchers say it is surprising that Sibal is announing piece-meal changes at a time he is working on a total revamp of the policy.