The government on Tuesday notified the much-awaited spectrum trading norms, more than a month after the cabinet nod, thus allowing telecom service providers to start to trade airwaves that in turn will help in service quality improvement.
According to the guidelines, spectrum trading will be allowed only between two access service providers, holding Cellular Mobile Telephone Service (CMTS) License, Unified Access Service License (UASL), Unified License (Access Services)(UL(AS)) and Unified License (UL) with authorization of access service in a licensed service area.
Spectrum trading will also not alter the original validity period of spectrum assignment as applicable to the traded block.
Both the licensees trading the spectrum will jointly give a prior intimation for trading the right to use the spectrum at least 45 days before the proposed effective date of the trading as per prescribed format to wireless adviser, wireless planning and coordination wing in the department of telecommunications.
Reacting to the development, Cellular Operators Association of India director general Rajan. S. Mathews told IANS that it was "in line with what the industry wanted".
"It will lead to consolidation, efficient spectrum usage and activities in few key circles. It is not a game changer, but it is important," he said.
The guidelines also say that a service provider who wants to sell allocated spectrum will need to convert it into tradable airwaves by paying a market price to the government.
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Spectrum trading will be permitted in 800, 900, 1800, 2100, 2300 and 2500 MHz bands, and the seller should clear all its dues prior to concluding any agreement for spectrum trading. Thereafter, any dues recoverable up to the effective date of trade shall be the liability of the buyer.
"The government shall, at its discretion, be entitled to recover the amount, if any, found recoverable subsequent to the effective date of the trade, which was not known to the parties at the time of the effective date of trade, from the buyer or seller, jointly or severally," the guidelines said.
"The buyer should be in compliance with the prescribed spectrum caps declared from time to time. It is clarified that the spectrum acquired through trading shall be counted towards the spectrum cap by adding to the spectrum holding of the buyer," they added.
Mathews said the industry has requested government to take a re-look at the caps.
The guidelines also hold that a telecom service provider will be allowed to sell the spectrum through trading only after two years from the date of its acquisition through auction or spectrum trading or administratively assigned spectrum converted to tradable spectrum.
If the buyer is acquiring a part of the spectrum holding of the seller in a spectrum band, then both buyer and seller will have spectrum holding in that band after the trade, it clarified.
If any TSP sells only a part of its spectrum holding in a band, both buyer as well as seller, will be required to pay the remaining instalments of payment, prorated for the quantum of spectrum held by each of them subsequent to the spectrum trade.
"A non-refundable transfer fee of 1 percent of the transaction amount of the trade or 1 percent of the prescribed market price, whichever is higher shall be imposed on all spectrum trade transactions, to cover the administrative charges incurred by government in servicing the trade. The transfer fee shall be paid by the buyer to the government," it added.
The seller should clear its Spectrum Usage Charges (SUC) and its instalment of payment due till the effective date of trade and thereafter, the buyer shall clear all these dues.