The Communications and IT Minister, Mr Kapil Sibal, has offered warring telecom operators a peace deal in a bid to resolve the 2G spectrum imbroglio. Under this deal, the Telecom Ministry has offered to shelve its plans to impose retrospective charges for existing spectrum usage.
Instead, the operators will be given the option to either pay for the remaining period of the licence, and then pay a market-based price at the time of renewal, or pay the current market based price now and keep it for 20 years.
This is expected to result in huge savings for incumbent GSM players that were staring at huge payouts under the earlier plan of charging retrospectively. For instance, Airtel, which got licences in 1994-95, would have had to pay for the past 18 years, based on the price determined in the upcoming auction.
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Sharing spectrum
Mobile companies will also be allowed to share spectrum with one another at no additional cost. Operators will also be permitted to deploy any technology once they buy spectrum. This will automatically resolve the ban on 3G intra-circle roaming, which is threatening to put 3G players out of business.
The package was offered to telecom companies by the Telecom Ministry recently for comments. According to top Government functionaries, the effort was to transit to a stable equilibrium that brings all players on a level field. The official compared the package to the migration offered to mobile players in 1999 from fixed fee to revenue share.
However, the peace plan is unlikely to fly as it has not gone down too well with dual technology players. Tata Teleservices has already shot off a letter rejecting the plan on the grounds that it favours incumbent GSM players and ignores the concerns of new operators.
No level field
“Since the intention is to charge for all spectrum prospectively, those who have the shortest period to renewal would stand to gain differentially as compared to those whose licences were issued later and hence have longer periods to renewal,” Mr N. Srinath, Managing Director, Tata Teleservices said in a letter sent on June 4 to the Department of Telecom.
The company said that older operators, which have enjoyed the benefits of more and better spectrum at lower or no costs for the longest period, now also get to migrate into a new regime at the least cost among all the operators.
“Under the package being considered, dual technology players would end up paying twice for spectrum,” Mr Srinath stated.
The company said that dual technology players would have no choice but to terminate CDMA services.
He sought more clarity on issues pertaining to re-farming, exit options on spectrum and availability of radio-frequency in the future.