The Hindu Business Line : Raja clears licences for new operators

New Delhi, Feb. 26 The Communication and IT Minister, Mr A. Raja. on Tuesday gave his permission to issue licences to new telecom operators. The approval came late in the evening and the companies may be issued licences on Wednesday. However, according to Government sources, the companies which had received letters of intent for pan-Indian operations may only get licences in a few select circles due to a crunch in spectrum.

The companies which had been given the LoIs include Datacom, Shyam Telelink, Swan, Unitech, BPL, Idea Cellular and STel. However, DoT has enough spectrum for all the players in only 4 circles. In other circles, only one or two operators may get the licence despite having paid an entry fee of Rs 1,650 crore. The licences being issued is also subject to the final decision of the High Court.

Some of the companies whose application was rejected had gone to court challenging the Government’s decision. While the entry of new operators could result in lower mobile tariffs, it is not yet clear how the Government plans to allocate spectrum to them. Wireless Planning and Coordination wing has told DoT that there is no spectrum left in the 900 Mhz band. Though there is capacity in the 1800 Mhz band there are already 5-6 operators in each circle demanding additional frequency before it is allocated to new players.

If the court gives an order to accommodate the applicants, which have been refused licence by DoT, there will be more pressure on spectrum availability. WPC had suggested keeping aside 45 Mhz of bandwidth aside for meeting such demands and allocate only the balance to the new licence holders. That does not leave much for the new players. The Finance Ministry had earlier suggested conducting an auction for allocating spectrum in order to give all the players an equal opportunity to bid for it.

DoT has, however, proposed to allocate spectrum based on first-come first-serve process. However, lack of clarity in the proposed first-come first-serve allocation process is likely to result in more disputes as different companies have already started to claim first rights to limited radio waves based on their own interpretations of who applied first. While a section of the operators, which had applied for a licence in 2006, have demanded spectrum based on the date of application, others have argued that the allocation should be based on the date of paying the entry fee. Idea Cellular and Spice have already filed an appeal in the court against using the date of paying the entry fee for distribution of spectrum.

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