Telecom Commission for spectrum price discovery via auction

The Telecom Commission has recommended that discovery of spectrum prices should only be through an auction in future, both for 4.4 MHz of start-up airwaves or additional bandwidth beyond this required by telecom operators from time-to-time.

The Telecom Commission has submitted its recommendations to Telecom Minister Kapil Sibal, who will take a final decision in this regard and also a seek Cabinet nod for the proposal.

According to sources, the Telecom Commission has recommended that all spectrum allotments beyond 4.4/2.5-MHz will be charged at market price, both from existing as well as new allottees, and the price for spectrum in the 800/900-MHz band will be 1.5 times the price of spectrum in the 1800-MHz band.

In December last year, the Telecom Commission had taken a decision on Trai's recommendations with respect to spectrum auction, pricing and merger and acquisition-related issues.

Besides spectrum pricing, the telecom commission has recommended a uniform licence fee of 8% of adjusted gross revenue (AGR).

The telecom industry was demanding a lower licence fee of 6% of AGR, while sectoral regulator Trai had recommended a fee of 8% of AGR in a phased manner over a period of two years.

New guidelines will be put in place with respect to mergers and acquisitions. The merger of entities with a market share of up to 35% (based on subscribers and/or AGR) in wireline and wireless services should be permitted, the commission has recommended to Sibal.

However, appropriate guidelines shall be framed for cases where the merged entities would have a market share of more than 35%, in consultation with Trai and the concerned authorities, the source said.

Post-merger, an entity will not to be allowed to hold more than 25% of the spectrum in a service area.

Trai had recommended that if an entity, post a merger or acquisition, has up to 35% market share, it would be considered in the 'green line' or safe harbour.

However, in cases where the market share is above 35% but less than 60%, the proposal was to be referred to Trai, as per the sectoral regulator's recommendations. Subsequently, Trai will carry out a detailed examination to ensure that there is no abuse of market dominance, he added.

Spectrum sharing will be permitted in order to promote efficient utilisation of spectrum and Trai will be entrusted with the task of carrying out a review of usage of spectrum and make recommendations in this regard.

In addition, the Telecom Commission has recommended that spectrum in the 800-MHz and 900-MHz bands will be refarmed at the time of renewal. Trai will make detailed recommendations in this regard, the Telecom Commission has told Sibal.

Furthermore, a study will be conducted regarding the need for additional spectrum to supplement rural coverage provided by telecom service providers on a purely commercial basis.