Opinion
Allot or auction satellite telecom spectrum? Signal clarity, please.
Summary
- The rationale of insisting on auctions, as the Supreme Court did in its 2G-case ruling, has weakened as technology and global norms have evolved. The 2G muddle was value destroying. Indian laws should offer clearer guidance to regulators.
The 2G spectrum judgement of 2012 is making headlines again. The government is pleading at the Supreme Court (SC) for an amendment to its landmark telecom auctions ruling that mandated the sale of 2G spectrum to the highest bidder. But the Centre wants to allocate some spectrum through administrative means, such as licensing—an approach often used for procuring services from the private sector. This comes amid talk of the telecom department processing a permit for Elon Musk’s Starlink that needs spectrum to run satellite communication services in India, which will improve connectivity in remote regions with poor land-based telecom infrastructure.
But such exceptions are a sensitive matter, given the past political and economic fallout of the 2G case. In response to a presidential reference, by which the country’s nominal head seeks clarity on any law pertaining to current or anticipated public importance, the SC had clarified that spectrum auctions were not universally required.
The 2012 judgement had the severe economic consequence of 122 telecom licences getting cancelled, causing chaos. The SC’s reply to the President was advisory in nature, but the government is not taking any chances. India’s new Telecom Act allows allocation of spectrum via administrative means in certain cases, but leaves it subject to ambiguous determinations of public interest, which is not defined. Economic welfare considerations go beyond revenue maximization, but until this is spelt out in laws, administrative decisions would be vulnerable to judicial intervention.
The pricing of public goods or services must help ensure a fair distribution of resources to those able to make the best use of them. If the primary focus of allocating public goods is maximizing revenues from private bidders, pushing them to squeeze most profits out of what they acquire this way, it would risk these resources being monopolized by the richest few, retail prices getting inflated and consumer access declining.
Exceptions to the auction route are practical necessities. Take the case of satellite spectrum, a shared global resource. Unlike terrestrial spectrum used for communication signals between mobile-phone towers and users on the ground, satellite-based communication involves transmission of signals to and from assets in space. This necessitates global coordination to prevent signal disruptions between senders and receivers.
The International Telecommunication Union (ITU), the oldest United Nations agency, coordinates cross-border management of satellite spectrum. It works with 193 member countries, including India, through an international treaty—Radio Regulations. These guide members on regulating relevant bands of spectrum, including shared satellite spectrum. They recognize that satellite spectrum and geostationary-satellite orbits are limited natural resources and “must be used rationally, efficiently and economically."
The agency bolsters state capacity to oversee the complexities of satellite spectrum management. National telecom regulators don’t have the capacity to replicate what the ITU does, as Radio Regulations are hard to enforce. They are revised every three or four years at its World Radiocommunication Conferences (WRCs), which involve nearly 5,000 experts and country representatives who negotiate spectrum allocation and frequency coordination, and also develop strategies to ensure efficient and equitable use.
Allocating satellite spectrum is likely to fail in the absence of international coordination. Auctions may also lead to a violation of Radio Regulations that require member states to avoid harmful disruptions to signal transmissions. International precedence is in favour of administrative allocation in the case of satellite spectrum for these reasons. No country holds such auctions without considering their international impact, and all experiments to do otherwise so far have failed.
The US, for instance, was conducting auctions for satellite orbital resources for domestic broadcasting needs, but ceased this practice and passed the more up-to-date Orbit Act in 2000, which banned such auctions. Other attempts to auction satellite spectrum in countries such as the UK and Thailand also failed on account of insufficient bidder interest.
India must emerge from the long shadow of the 2G case because the evolving nature of technology and international cooperation demands a more responsive regulatory framework. The post-liberalization establishment of over a dozen economic regulators, including for the telecom industry, was party meant to ensure that rigidities of the public sector don’t spill over to the private sector and throttle progress and innovation.
Indian laws should offer clearer guidance to regulators. This will ensure that they have the clarity necessary for effective governance. As courts don’t always have what’s required to interpret ambiguous statutes and optimize economic gains, we need better legislation to guard against the repeated erosion of economic value. We must not forget this important lesson from India’s economic history.
