Operators will have to pay market price for spectrum

The days of getting spectrum bundled with licence are over. The draft New Telecom Policy 2011 has proposed to link spectrum allocation to a market-based mechanism, including auction.

“One of the objectives for the policy is to delink spectrum in respect of all future licences. Spectrum shall be made available at price through market-related processes,” Mr Kapil Sibal, Minister for Communications and IT, said while unveiling the New Telecom Policy 2011.

“To make best use of spectrum in line with technological advancement, an appropriate regulatory framework will be established for progressive liberalisation of spectrum utilisation,” he said.

This is a move away from the first-come-first-served policy followed under the current regime. While market based mechanism gives more transparency to the process analysts said that this could increase the cost of operations. “Delinking of spectrum from licences — the cost of spectrum will go up which will in turn increase customer servicing costs,” said Mr Hemant Joshi, Partner, Deloitte Haskins & Sells, on NTP 2011.

Tariff hike

When asked as to whether the Government was concerned about possible tariff hike as result of this move, Mr Sibal said the operators should strive to make services affordable. “If and when operators increase tariffs then we will talk to them,” he said.

The new policy also talks about periodic audit of spectrum to monitor efficient utilisation. It envisages a Spectrum Act to establish the Spectrum Management Commission. The Commission will subsume Wireless Planning Coordination wing of the Department of Telecom and will get wider powers including dispute settlement, pricing and regulations related to spectrum.

The DoT has circulated a draft of the proposed Spectrum Act for consideration by all stakeholders before it is introduced in Parliament.

Nine-member panel

According to the draft proposal, the Commission will comprise nine members including the Cabinet Secretary, Secretary of the Ministry of Defence, Secretary of Ministry of Space, Secretary of Information & Broadcasting and Secretary, DoT.

It will also have a spectrum re-farming fund administrator and two part-time members. The Commission will be headquartered in Delhi with regional office in Mumbai.

The agency will also get dispute settlement powers on any issue related to spectrum allocation. At present, the Telecom Dispute Settlement Appellate Tribunal is the sole adjudicating body. The Commission can ask the Telecom Regulatory Authority of India's recommendations but it will not be binding.

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