In what could lead to a significant delay in changing the present spectrum policy of India’s telecom sector, the department of industrial policy and promotion (DIPP) has asked for more time to consider a proposal by the department of telecommunications (DoT) recommending spectrum enhancement charges.
The government is looking to change the existing spectrum policy as part of an attempt to get the pricing right for this valuable commodity. Changes being considered include allowing spectrum trading and sharing as well as auction of spectrum, which is currently allocated on the basis of the number of subscribers a telco has.
The Telecom Regulatory Authority of India, or Trai, is at present looking into the issue and is expected to come out with its recommendations by 25 December.
Spectrum enhancement charge refers to the amount that needs to be paid by India’s telecom operators who have spectrum of more than 6.2 Mhz. This will apply to almost all the older operators including Bharti Airtel Ltd, Vodafone Essar Ltd, Idea Cellular Ltd, MTNL and BSNL, apart from BPL in Mumbai.
“The courts had ruled that the telcos had the right to spectrum of only up to 6.2Mhz as that is how much the licence agreement had committed. The spectrum cannot be taken back so the government has to find a way to allocate the spectrum,” said a regulatory expert who spoke on the condition of anonymity due to the sensitivity of the issue. “The damage for the telcos could be in several hundred crores.”
Pricing issue: The country has around 500 million cellphone subscribers. Rajkumar/Mint
According to a senior DoT official, who too spoke on condition of anonymity as he is not authorized to speak to the media, the department is trying to figure out a methodology for calculating the charge. “The methodology as well as the quantum should be out in time for the 3G (third generation) auction.”
Trai is looking at the issue as part of the recommendations it has been asked to make on spectrum management. In recent discussions on the issue, most telecom operators suggested that the fee be linked to the auction of 3G licences and spectrum, and a per Mhz cost be arrived at based on the final price of 3G spectrum.
Another recommendation was that the cost be benchmarked to the Rs1,650 crore UAS (universal access service) licence fee companies paid so as to offer second generation, or 2G, mobile telephony services.
“The DoT should then charge a 15% premium on that amount until 2008, when the spectrum was last allocated,” the regulatory head of one of the country’s largest telcos said, asking not to be identified. “It should be fairly done as it is proportional to the huge capital expenditure that the telcos have made in the past,” he added.
The secretary of DIPP is part of the telecom commission, the overarching policy decision-making body for the telecom sector in India. DoT’s secretary is its chairman. All proposals for policy amendments and changes go to all ministries that are considered relevant for the telecom sector and have a representative in the telecom commission.
“DoT is getting the issues relating to 2G cleared as fast as possible and is, therefore, working on the ministry as well as the Trai aspects of the issue simultaneously. Trai will make its recommendations and then the telecom commission will examine these. Based on its own examinations of these recommendations and that of the stakeholder ministries, the relevant policies will be amended,” the regulatory head of another telco said.
At a pre-bid conference hosted recently by DoT to address queries of potential bidders for 3G services, some telcos said that all pending issues related to 2G spectrum needed to be resolved before the 3G auction. India expects to auction 3G spectrum from 14 January to enable the country’s almost 500 million mobile subscribers to use 3G-based mobile telephony services.