Indian authorities to delink 2G spectrum from new licences

31 Jan 2011

The Indian authorities have announced that 2G spectrum will no longer be linked to new telecoms licences that are issued, with the state instead opting to charge new players for frequencies, Reuters reports. The country’s telecoms minister Kapil Sibal, who unveiled the change in policy, also revealed that existing operators such as Bharti Airtel and Vodafone Essar will be required to pay for any spectrum that they hold in excess of the 6.2MHz upper limit set by their concessions. The state auditor has named eight companies – including Bharti, Vodafone and Idea Cellular – as having been handed excess spectrum without having to pay for it.

Under the existing regulations cellcos are required to pay INR16.58 billion (USD363 million) for a pan-India Unified Access Services Licence (UASL), with the concession providing an initial allocation of 4.4MHz of 2G spectrum at no additional cost. Commenting on the proposals, Sibal noted: ‘We think there needs to be a directional shift away from the old policy… We are going to delink the licence from the spectrum in the new dispensation. Henceforth, spectrum will be awarded, apart from delinking, on a market-based pricing mechanism.’ While the pricing mechanism has yet to be finalised, it is believed that costs for additional spectrum could be decided via auction.

In separate but related news, India’s Economic Times reports that wireless operator Uninor has successfully appealed to the Supreme Court over the Department of Telecommunications’ (DoT’s) decision to increase the spectrum usage charges, with the apex court accepting the cellco’s petition in the matter. As previously reported by CommsUpdate, in November 2010 the Supreme Court had stayed an order made by the Telecoms Dispute Settlement and Appellate Tribunal (TDSAT) which upheld increases in the charges for 2G spectrum usage. The ruling followed an appeal against TDSAT’s decision by three GSM operators – Bharti, Idea and Vodafone – which were prompted by the DoT’s February 2010 unveiling of revised spectrum charges for both GSM and CDMA operators; the regulator had proposed an increase of up to 50%, with the charge rising to between 3% and 8% of revenue. A month later, in March 2010, on the back of complaints over the proposals from a number of cellcos, the TDSAT stepped in and released an interim order halting the levy increase, which was due to come into force on 1 April, only for it to rule that the DoT had followed proper consultation from the Telecom Regulatory Authority of India (TRAI) in September 2010. The latter decision spurred operators to challenge the tribunal’s order, claiming that it had ignored the fact that the TRAI’s recommendation was ‘without any effective and timely consultation process’.