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The Department of Telecom is exploring the option of determining price of 2G spectrum through an auction instead of the formula suggested by TRAI, the telecom regulator. The DoT has asked the Wireless & Planning Coordination wing to study the feasibility of holding an auction next year and put up a paper for the consideration of the Telecom Commission.
The Telecom Commission, which has met more than 4 times over the past one month to finalise the 2G spectrum policy, will take a final view after the WPC presents the paper.
The move to explore the auction route follows representation by the incumbent operators against the TRAI formula. The telecom regulator had suggested that all operators who own more than 6.2 Mhz in a circle should be asked to pay a one-time fee. The TRAI had proposed Rs 4,571 crore per Mhz on a pan-India basis to be calculated on a pro rata basis for the remaining period of the licence. Based on this method, operators like Bharti Airtel would have to pay about Rs 3,500 crore because it has more than 6.2 Mhz spectrum in a number of circles.
The operators, in a letter to the Telecom Minister, Mr Kapil Sibal, said that there is no legal basis for TRAI to conclude that a one-time fee is payable beyond 6.2 Mhz. “In case DoT wishes to shift from the current regime of graded spectrum usage charges to a one-time fee it should be on a prospective basis. For finalising the one-time charge applicable beyond 6.2 Mhz, we support the route of auction instead of TRAI recommendations,” the letter from Bharti Airtel, Vodafone and Idea Cellular said.
Senior DoT officials said that the proposal to auction was discussed at a meeting with the Secretary, DoT. The key issue for holding the auction is to find 2G spectrum to sell. Currently, DoT has some air waves in a few select circles. The defence forces is expected to vacate some more but that is dependant on how fast DoT can fulfil its commitment made in terms of creating alternate infrastructure for the armed forces. The other option would be to cancel licences of the some of the new players who have not rolled out services and then sell it in the open market. But market experts expressed concern that such an auction may not throw up the actual price of spectrum because the incumbent players will have an opportunity to keep prices down.
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