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HC okays spectrum allocation, but keeps leash on

Delhi HC rules allocation would eventually be subject to its order – thus keeping a business risk on firms who must pay huge amounts to get the radio waves, reports Archana Khatri.

business Updated: Jan 03, 2008 22:13 IST
Archana Khatri

There is no court bar on the government allocating spectrum to new telecom licence applicants, but the Delhi High Court on Thursday ruled that allocation would eventually be subject to its order – thus keeping a business risk on firms who must pay huge amounts to get the radio waves.



While hearing a petition from GSM operators that have challenged industry tribunal TDSAT's order that allowed the government to allocate spectrum to new applicants and CDMA players alike, the Delhi High Court made it clear that its eventual views would form a constraint.



Reliance Communications is waiting to diversify from CDMA to GSM services, but a question mark hangs over its GSM spectrum because the Cellular Operators Assocation of India (COAI) who represent firms like Bharti Airtel and Vodafone says that Reliance's spectrum application was cleared on invalid grounds.



The high court issued notices to the Centre, regulator TRAI and Reliance Communications and Tata Teleservices and also sought a response from a slew of other firms including state-run BSNL and MTNL, giving them a week's time to give their views on the matter.



Hearing the petition, Justice Gita Mittal said: "Anything done by (the Centre) in furtherance of an application made by Reliance will be subject to the outcome of this writ petition."



The key issue following this is that even if spectrum is allocated, given that firms will pay a high price for it, effectively, their business would be subject to the court's ruling.



"Even if the government allocates the letter of intent, I don't think anyone will deposit the entry fee until and unless there is clarity on the methodology on how and when spectrum will be allocated. It's a matter of hundreds of crores of rupees," said the head of a telecom service company, who did not want to be identified.



In another development, Reliance Communications filed a petition in TDSAT asking for the return of excess spectrum available with the GSM operators, and seeking transparent guidelines for allocation of spectrum.