Telecom bigwigs, including Bharti’s Sunil Bharti Mittal and Reliance Communications’ Anil Ambani and heads of other operators, knocked on communications minister Kapil Sibal’s door again to express their concerns on various issues — like one-time fee for excess spectrum, new mergers and acquisitions norms — involving the sector.
The key issue discussed in the meeting was the pricing of 2G spectrum. Operators have opposed the levying of charges with retrospective effect, as it was not there in the earlier licence conditions. They said if such a proposal was accepted, they would have no choice but to return the spectrum, according to people close to the development.
The Telecom Commission (TC) is learnt to have finalised a new pricing formula for spectrum allocation. A cut-off date is to be determined till which incumbent operators allotted spectrum beyond 6.2 Mhz would have to pay for it on a pro-rated 3G spectrum price or a Trai-determined price, whichever is higher. The regulator had priced spectrum at an average of 1.65 times the 3G price.
For the period beyond the department of telecommunications’ cut-off date, to be fixed later, the price of the additional spectrum is to be determined through auction. Incumbents will not have to pay retrospectively for the spectrum beyond 4.4 Mhz. However, after the cut-off date, all spectrum already allocated or to be allocated beyond 4.4 Mhz will be fixed on the basis of the auction price till the end of the licence period.
On Tuesday’s meeting was held in the backdrop of the TC, the highest policy making body of the DoT, finalising most of the proposals based on Trai’s recommendations on pricing and allocation of spectrum, spectrum sharing and M&A norms. TC has already sent its final recommendations on the pricing of spectrum and other recommendations of Trai to Sibal for a decision. The matter is expected to go to the Cabinet for final approval.
The issue of pricing of spectrum may also be referred to an empowered group of ministers (GoM), a senior DoT official said. DoT has already asked for legal opinion of all the TC’s decisions.
TC has agreed to impose a one-time fee on operators for holding spectrum beyond 4.4MHz and charge for excess spectrum beyond 6.2 MHz with retrospective effect. In the future, the government is likely to go for an auction method. The government is also set to announce the a telecom policy by June.
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Apart from Mittal and Ambani, others who attended the over-an-hour-long meeting include Vodafone CEO Marten Pieters, Idea MD Himanshu Kapania and Tata Teleservices’ MD N Srinath.
“The operators conveyed their views on various issues which are also a part of regulator Trai's recommendations. The minister gave them a patient hearing," DoT Secretary R Chandrashekhar said.
The industry is opposing the government’s move to charge a one-time fee on spectrum beyond 4.4 MHz for GSM operators and 2.5 MHz for CDMA players. If the fee is levied, the operators could be poorer by about Rs 17,000 crore.
All telecom operators had agreed on a fair and transparent auction as the preferred method for ascertaining the market value of spectrum, given the ambiguity involved in alternative methodologies. After the 2G spectrum controversy, banks have shown their reluctance to give loans to telecom players. All telcos asked Sibal to help them in this matter.
Operators had also asked Sibal earlier that all telcos be allowed to participate in the auction of 700 MHz and any amendments to licence norms must happen through bilateral agreement, instead of the practice of unilateral amendments being made currently.
In the last meeting on November 30, the telcos chiefs had met Prime Minister Manmohan Singh, finance minister Pranab Mukherjee and Sibal and other ministers on the same issues.
The operators also discussed 3G roaming agreements. DoT, which had declared 3G roaming agreements between Bharti Airtel, Idea Cellular and Vodafone illegal, had asked operators to immediately stop providing 3G services. But, the operators had moved the telecom tribunal, TDSAT, challenging the DoT’s order. Subsequently, TDSAT had stayed the DoT order. The matter is still pending. DoT is also contemplating to move the Supreme Court over the 3G roaming issue. Operators have already moved a caveat in the SC on this issue.
The operators had also said the government must encourage 3G roaming arrangements among operators, as it will facilitate penetration of broadband across the country.
The operators also met Trai chairman J S Sarma on Tuesday and discussed various issues such as consumer protection guidelines and lifetime validity cards.
There were some issues — including reframing of spectrum from incumbent GSM operators and pricing of excess spectrum — where there was no unanimity, sources say. One view was that as new GSM operators were being asked to pay for spectrum beyond 4.4 Mhz incumbent operators should pay for spectrum retrospectively from 4.4 MHz and not from 6.2 MHz as was proposed by DoT. Questions were also raised as to whether other operators should be roped in to get an overall consensus. The telcos are expected to come back again, maybe after two weeks, to discuss some sticky issues.