The Telecom Regulatory Authority of India on Tuesday cleared the spectrum trading guidelines allowing mobile operators to buy and sell airwaves. Operators can trade spectrum which they have bought through auction or have paid market price. Administratively allocated spectrum cannot be traded. 

According to the guidelines recommended by the telecom regulator, the Government may collect a transaction fee on spectrum being traded between telecom companies. 

Spectrum trading is expected to change the dynamics of the industry as it will allow operators to buy and sell airwaves according to their needs. For example, an operator with more subscribers in a circle can buy additional spectrum from another player. Currently, spectrum trading is not allowed in India.

The proposed transaction fee would be one per cent of the transaction amount. Operators selling spectrum through the trading mechanism will have to notify the Telecom Department about the quantity of spectrum being sold and the price.

There is also a lock-in period for the spectrum traded. If an operator buys spectrum through the trading route, then it will not be permitted to sell any airwaves in the same frequency band for two years.

The seller is free to choose the mechanism to find a prospective buyer, including the auction route.

Spectrum trading refers to the transfer of rights to use the spectrum. The words ‘seller’ and ‘buyer’ are used in the context of transferring the rights from one user to another. When a block of spectrum is traded, the associated rights and obligations of the spectrum block shall stand transferred from the seller to the buyer.

Under spectrum trading, only outright transfer of spectrum is permitted, that is, the ownership of the usage right is transferred to the buyer. Spectrum leasing is not permitted at this point of time.

Spectrum trading will not alter the original validity period of spectrum assignment.

A licensee shall not be allowed to trade in spectrum if it has been established that it is in breach of terms and conditions of the licence and the licensor has ordered for revocation/termination of its licence.

For the present, spectrum trading shall be permitted only on a pan-LSA (Licensed Service Area) basis, that is, spectrum cannot be traded for a part of the LSA. In case the spectrum assigned to the seller is restricted to part of the LSA by the licensor, then, after trading, the rights and obligations of the seller for the remaining part of the LSA with regard to assignment of that spectrum shall also stand transferred to the buyer.

Suppose, due to non-availability of spectrum in some of the districts of an LSA, spectrum has been assigned to a TSP (seller) in only some parts of an LSA (say in 22 districts out of total 33 districts of Rajasthan) with a promise to assign spectrum in the remaining on its availability and it transfers its right to use the spectrum to another TSP (buyer) through spectrum trading. Then, whenever spectrum in remaining 11 districts become available, the spectrum in these districts shall be assigned to the buyer in line with the promise to the seller, after the payment of the balance amount for the remaining 11 districts, if applicable.

The seller and the buyer will be required to inform the licensor regarding the spectrum trade, six weeks prior to the effective date of trade. However, no permission will be required from the Licensor/Government for Spectrum Trading.

All spectrum bands earmarked for Access Services by the licensor will be treated as tradable spectrum bands. Currently, spectrum in 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz spectrum bands have been allocated for Access Services.