The Department of Telecommunications’ (DoT) move to fix the price of spectrum for 10 years, rather than the duration of the entire licence period of 20 years, is likely to create confusion in the telecom sector, which is already passing through uncertainty.
Currently, telecom operators pay the price of spectrum for 20 years.
In a letter to the Telecom Regulatory Authority of India (TRAI), DoT has asked it to “comment on the desirability of an alternative approach of fixing the spectrum price for a period of 10 years (even though allocation could still be for 20 years), with the price after 10 years being the market price prevailing at that point of time…”
“This will take us back to the pre-90s licence/permit quota Raj days,” said BK Syngal, former chairman and managing director of Videsh Sanchar Nigam Ltd (Now Tata Communications). “It will introduce an element of uncertainty and will put off already frustrated investors. No bank will fund such a project.”
Cellular operators have also opposed it.
“The operators have to make huge investments in setting up infrastructure,” said Rajan S Mathews, director general of Cellular Operators Association of India (COAI). “Ten year scenario for allotting spectrum is very short. That is why all the existing licences for 2G, 3G and BWA are issued for 20 years.”
The new telecom service providers whose licences were cancelled following the Supreme Court’s February 2 order will be effected by the decision.