Spectrum auction begins

The much-awaited second generation (2G) spectrum or airwave auction for the 900 MHz and 1,800 MHz bands began Monday.

Eight telecom service providers - Reliance Communications, Reliance Jio, Bharti Airtel, Vodafone, Telewings, Aircel, Tata Teleservices and Idea Cellular - are participating in the bid.

The total spectrum on offer is 46 MHz in 900 MHz band (only Delhi, Mumbai and Kolkata) and 385 MHz in 1,800 MHz band (all 22 circles) simultaneously. The government expects to mop up Rs.40,874.50 crore from this spectrum auction.

The auctioning of the airwaves are done to obtain a market determined price of the spectrum. This auction does not have any last date. It will go on Monday to Saturday from 9 a.m. to 7.30 p.m. till the time telecom service providers keep bidding.

The service providers will bid using fixed internet protocols (IP) as dynamic IP addresses are not allowed.

The union cabinet Jan 31 approved spectrum usage charges (SUC) at five percent of annual gross revenue (AGR) for mobile telephone service providers who are all set to buy the airwaves.

"The spectrum acquired in the current auction will be charged at 5 percent of the AGR. In cases of combination of existing spectrum in this band and spectrum acquired through the auction, the weighted average will apply to all the spectrum held by the operator in 900 MHz and 1,800 MHz band," the cabinet decision said.

It clarified that the licensees who do not acquire spectrum in this auction will continue to pay SUC according to the existing slab rate.

The SUC is levied annually as a percentage of revenue earned by telecom companies, which varies from 3-8 percent. The Telecom Regulatory Authority of India had earlier suggested a uniform 3-5 percent fee from April 1 across the telecom services for a successful next round of spectrum auction.

In 2012-13, the government's revenue collection from SUC was Rs.5,689 crore.

Regarding the Broadband Wireless Access (BWA) spectrum, the Cabinet decision said: "In respect of BWA spectrum acquired through auction in 2010, SUC will continue to be charged, as per present practice, and the operator would be required to report the revenue earned from BWA spectrum 'separately'."