GSM body warns Raja against 2G auction

In a strongly worded letter to Communications Minister A Raja, the Cellular Operators' Association of India, which represents GSM operators, has said the proposed auction of 2G or second generation spectrum by changing the licence conditions will be "an assault on the fundamental character of the licensing policy and violate the contract between the parties (operators and government)".

Hinting that this could lead to legal battles between the government and the operators, the letter, dated July 23, said the damage would extend far beyond the existing licences.

"If licences were to be treated as mere scraps of paper that can be mutilated at will... (it) would adversely impact the entire policy, regulatory, contractual and investment climate, creating uncertainties and disputes and harm the orderly growth of the sector," it said.

The letter comes as the government is looking at auctioning the additional spectrum for 2G operations instead of allocation on the basis of subscriber base.

Under the universal access service licence conditions, GSM or global system for mobile communication operators are entitled to 6.2 MHz and code division multiple access (CDMA) operators 5 MHz of spectrum.

More spectrum is allotted if the operator shares additional revenue with the government and reaches a certain subscriber base.

The CDMA operators have been seeking the auction route to ensure more efficient use of the spectrum.

The Cellular Operators' Association of India pointed out that the "feasibility of auctions is completely untenable and in conflict with not only the existing policy and licensing framework but also the contractual settlement between the government and the GSM industry."

The letter argues that the licences awarded by the government do not cap the spectrum allocation for GSM operators to 6.2 MHz. Under clause 18.3.1 of the licence, any additional bandwidth that is allocated will attract an additional licence fee on a revenue-share basis. The principle of charging for additional spectrum was clearly provided for in the licences, it said.

Referring to the settlement according to which the operators decided to migrate to the universal access service licence regime, the letter pointed out that the association had, in August 2002, agreed to withdraw all pending litigation regarding spectrum.

The letter said the service providers who had been granted a cellular licence must be assured adequate spectrum.