One-time fee decision to wait for Vahanvati’s opinion

New Delhi: The ministerial group finalizing terms for the auction of spectrum met on Wednesday and decided to wait till the country’s attorney general responded with his opinion, before taking a final decision on the controversial one-time fee for spectrum held by incumbent operators.

The issue of the one-time fee has been severely criticised by telcos as well as various arms of the government, including the Planning Commission. Telcos such as Bharti Airtel Ltd and Vodafone India Ltd will see some of their licences expire in 2014 while others such as Reliance Communications Ltd and Tata Teleservices Ltd will see theirs start expiring post 2020.

“The next meeting of the eGoM (empowered group of ministers) will likely take place on 8 October,” a senior Department of Telecommunications (DoT) official said, speaking on condition of anonymity. This person added that Wednesday’s discussions revolved around the notice inviting applications for the coming auction of second generation or 2G spectrum that was issued last week. The ministerial panel approved DoT’s decision to allow foreign companies to participate in the auction. DoT had also said that telecom licences would only be given to these companies if they have an Indian partner holding at least 26% stake.

Last week, DoT had asked the country’s highest law officer, attorney general Goolam Essaji Vahanvati, about the legality of making the older operators pay for 2G spectrum they hold based on the price of the airwaves discovered in the coming auction. The government is expected to start the auction for 2G spectrum in the 1,800MHz and 800MHz bands on 12 November.

DoT chose to go to the attorney general after the Supreme Court didn’t respond to the relevant query in the presidential reference on 27 September. The apex court had said that policy decisions were up to the government and the court could only question the implementation of these policies.

In its July meeting, the ministerial group had decided to defer its decision on the issue till presidential reference was dealt with by the Supreme Court.

DoT has proposed four options for the one time fee: charging for all the spectrum held by the telco; charging for spectrum above the so-called start-up spectrum of 4.4MHz; charging for spectrum above the contracted 6.2MHz; and not charging at all. If the operators have to pay for spectrum, the government could earn between Rs.30,000 crore and Rs.1 trillion. The ministerial panel was also expected to discuss issues relating to refarming and the third phase e-auction of FM radio services.

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