Panel for market determined pricing of spectrum

The government-appointed committee for allocating and pricing spectrum has recommended doing away with the bundled start-up frequency with the new licence and suggested that radio waves should be given at a market determined price.

The committee, headed by Additional Secretary Subodh Kumar in the Department of Telecommunications, submitted its report today which said “in case any new licences are issued in future, they should not carry with them any eligibility for start-up spectrum.”This comes in the wake of eight new companies getting new licences last year that raised a controversy when existing telcos suggested spectrum should be auctioned and not given at a throwaway price of Rs 1,651 crore to new operators. Besides initial spectrum, the committee has also recommended a major shift from the existing practice of subscriber-linked criteria for additional radio waves saying this should be auctioned and the price each mega hertz may be derived from the ongoing exercise for 3G auction.

“No additional spectrum should be assigned to any licences in future based on subscriber-linked criterion. This includes licences who may have already become eligible for additional spectrum. All assignment of spectrum in future should be through auction, limited to UAS licences,” the report said.

In the case of additional spectrum already given to some of the mobile operators since January 17, 2008 (on day when TRAI formula came into effect with increased number of subscribers to become eligible for additional spectrum) should attract an “upfront” charge.“This charge should be derived from the 3G auction prices pro-rated per MHz,” the report added.

The committee also dealt with the controversial issue of mergers and acquisitions and is understood to have recommended in favour of it in view of efficient use of scarce spectrum. The panel has suggested the concept of start-up spectrum be done away with and accordingly the operators would also not be bound by the rollout obligations.