The spectrum allocation policy for mobile telephony that caused a political uproar and then an industry-government gridlock is set to change all over again with the Prime Minister Narendra Modi-headed Cabinet approving a set of base prices to sell radio waves.
The base prices for different bands of radio waves that can potentially earn a minimum of Rs 64,840 crore if the bids sail through successfully as planned next month.
Of this Rs 16,000 crore is expected to be realised in the current financial year as the payments will be made in a staggered manner.
Most importantly, the Cabinet has resolved an issue pending for more than 7-8 years of getting 5MHz vacated from the ministry of defence. This process is expected to be completed in the next 45 days, a senior source in the communications ministry said.The tricky bit, however, would be the impact on consumer tariffs, with some analysts fearing that operators, reeling under heavy debt, may eventually end up increasing tariffs.
A successful selling of radio spectrum is critical for the government's fiscal math. It is also critical for operators to provide good connectivity, higher voice quality and data communication.
The Cabinet approved the proposal of the communications ministry to auction spectrum in 800, 900, 1800 megahertz bands. The schedule for bidding will be announced in the next few days.
The cabinet also decided that spectrum in 2100 MHz band - used for more high-speed services - is aimed to simultaneously put to auction. The dates and details for it will be announced later.
"The process of spectrum auction will aim to ensure, there is efficient use of spectrum and avoids hoarding, stimulate competition in the sector, promote rollout of the respective services," said Union communications minister Ravi Shankar Prasad.
The government has set a reserve price of Rs 3646 crore for pan-India per MHZ in 800 MHz band, Rs 3980 crore for 900 MHz band pan India (excluding Delhi, Mumbai, Kolkata and J-K) and Rs 2191 crore pan India (excluding Maharashtra and West Bengal) in 1800 MHz band.
The total quantum of spectrum to be put to auction will be 380.75 MHz.