Trai likely to propose auction of 2G spectrum

The Telecom Regulatory Authority of India (Trai) is likely to propose the auction of second generation (2G) spectrum, delinking spectrum from unified access service licence (UASL).

Currently, UASL comes bundled with 4.4 MHz of start-up spectrum. Subequently, service providers are allotted 1.8 MHz of spectrum after meeting subscriber targets, as fixed by the Department of Telecommunications (DoT).

A senior Trai official confirmed that the regulator was likely to propose the auction of spectrum against the current practice of bundling it with a licence. A pan-India UASL comes at a cost of Rs 1,651 crore.

This would imply that service providers would need to pay a price even for the start-up spectrum, which currently comes free for them.

The regulator is expected to come out with its recommendations on the issue soon as operators want clarity on certain issues, including 2G spectrum allocation before the start of the 3G auction, which is expected to start in February 2010. Trai had floated the consultation paper on overall spectrum management, mergers and acquisitions (M&As) and review of licensing conditions in October.

The regulator would also give its recommendations on the sharing and trading of spectrum, capping the number of service providers in a circle and M&As.

The issue of delinking spectrum from the licence had divided the telecom sector. Telecom service providers like Bharti Airtel and Vodafone Essar were in favour of delinking spectrum from UASL, while Reliance Communications and Tata Teleservices took a contrary view on the issue.

Bharti Airtel said the new UASLs issued in future should not carry with them any eligibility for start-up spectrum. The licensee would have to go to the market even for start-up spectrum. However, Reliance Communications said the contractual spectrum in 800, 900 and 1,800 MHz bands cannot be delinked from the existing UASL. “Due to unavailability of spectrum in 800, 900 and 1,800 MHz bands, it will not be desirable to issue new licence with the linked spectrum in these bands without ensuring all licensees will get contracted spectrum,” RCom said.

Earlier, the DoT committee on 2G spectrum, chaired by Subodh Kumar, additional secretary, DoT, had recommended that 2G spectrum should be auctioned, as done in most countries and not allocated according to the subscriber-linked criteria.

The committee, which included representatives of the government, Trai, telecom technology experts and industry executives, was formed in June 2008 to look into the issues of the 2G spectrum allocation policy. The report was then sent to Trai for its final recommendations.