New Delhi: The Supreme Court has given the government another three months to conduct auctions for the 2G spectrum that will be freed up following the cancellation of licences in February, rejecting a petition by the department of telecommunications (DoT) asking for a year.
This means telcos whose licences the court cancelled will get another three months to wind up operations. The breather will allow them to operate until 7 September, rather than the previous 2 June deadline.
On Tuesday, the court rejected DoT’s clarification petition asking for 400 days to complete the auction process.
“In our view, it will be just and proper to partially accept the averments made in the application (by the Centre),” the two-member bench comprising justices G.S. Singhvi and K.S. Radhakrishnan said. “Accordingly, the time specified for conducting the auction and grant of licences is extended up to 31 August 2012.”
On 2 February, the Supreme Court cancelled 122 licences allocated to nine companies in January 2008. The court had allowed the firms to continue operating until the government completed the auction.
The court said on Tuesday that those of the above companies that win spectrum in the auction will be allowed to continue operations. If not, the licences will have to surrendered, it clarified.
The affected companies welcomed the decision of the Supreme Court.
Following the 2 February ruling, DoT filed a clarification petition and a review petition against the ruling.
During the hearing, attorney general G.E. Vahanvati tried to explain the difficulties of complying with the apex court order, which made it incumbent on the government to complete the entire auction exercise by the June deadline. Vahanvati also apprised the bench about the recommendations on spectrum auction that the Telecom Regulatory Authority of India (Trai) announced on Monday.
“You ask for 400 days. That is your prayer. How much time did you take to complete the process in 2008? The entire exercise could have been avoided if little more effort would have been made,” the bench said. “We are still not in a position to believe that your officers were so naive that they don’t understand the difference,” it said, referring to the calculation made by DoT over the grant of start-up 4.4 megahertz (MHz) spectrum and 6.2MHz contracted spectrum in 2008.
The bench further added that the “government was alive and aware that something wrong has gone and petition was filed in 2010”.
Before passing the order, the bench said it was extending the time because technically it would not be possible to complete the process by 1 June.
The main reason for the DoT application was that about 70 million subscribers would be affected by the February ruling, it said in the petition.
“As the licences/spectrum can be issued only in and around March 2013 and the licences (would) stand quashed with effect from 2 June 2012, there will be an inevitable disruption in services for the subscribers of those licence holders whose licences (would) stand quashed by virtue of the judgement of this court,” the DoT petition said. “It is respectfully stated that the total number of subscribers indirectly affected by the judgement of this court is over 69 million, representing almost 7.5% of the total mobile subscribers in India.”
On Monday, Trai recommended a timeline for the auction of spectrum in various wavelengths over the next three years. It also suggested that only 5MHz of 2G spectrum be auctioned immediately, making it difficult for any of the operators who got their licences cancelled to re-enter the market. The recommendations have been criticized due to the high minimum price for spectrum that the regulator has suggested.
Trai chairman J.S. Sarma defended the recommendations on Tuesday, saying spectrum was currently unduly cheap and the recommended base price is meant to reflect a validity of 20 years, lower roll-out costs and multiple use of bandwidth to offer a number of services.
The government has said that a nine-member empowered group of ministers (eGoM) will look into the various aspects of Trai’s recommendations. The terms of reference for the eGoM include the quantum of spectrum to be auctioned, the number of blocks to be auctioned, eligibility criteria for potential bidders, the reserve price, and fees payable to the auctioneer.
The affected operators include Uninor (Unitech Wireless Ltd), MTS (Sistema Shyam TeleServices Ltd, or SSTL), STel Ltd, Etisalat DB Telecom Pvt. Ltd, Loop Telecom, Videocon Mobile, Idea Cellular Ltd (including Spice) and Tata Teleservices Ltd.
“We welcome the fact that the court has ensured speedy auctions and allowed our operations to continue till such time. 31 August, however, also means that the government must move fast to review some of the recommendations that are otherwise certain to have a catastrophic impact on the industry and on tariffs for the common man,” said a spokesperson of Uninor, which with 22 cancelled licences is the worst hit by the apex court’s February ruling. “Issues on which there is already an industry consensus can be resolved very quickly,” the spokesperson said in an email.
MTS also welcomed Tuesday’s ruling. “The said order comes as a huge relief to our customers, employees, investors and all members of the telecom ecosystem who are both directly and indirectly associated with SSTL,” its spokesperson said in an email.
PTI contributed to this story.
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