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Spectrum grinds towards auction

Reduce licence fee, delink spectrum charges from licence and allot spectrum through an auction process. These are some of the recommendations of the inter-ministerial committee appointed for pricing and allocation of spectrum, reports Manoj Gairola.

india Updated: May 14, 2009 22:37 IST
Manoj Gairola

Reduce licence fee, delink spectrum charges from licence and allot spectrum through an auction process. These are some of the recommendations of the inter-ministerial committee appointed for pricing and allocation of spectrum.

Currently, a unified access service licence (UASL) that allows companies to offer fixed line and wireless services and comes embedded with a start up spectrum of 4.4 MHz.

This increases the price of the licence to Rs 1,650 crore for launching services at a national level. The committee has recommended that the new licences would only give right to a company to provide services.

The licences will be common for fixedline and wireless services. If a company wants to offer mobile services, it will have to get spectrum separately. Its price will be determined through multi-stage auction process.

Presently, the licences are issued on a first-come-first-served basis. Additional spectrum is allotted on the basis of number of subscribers a company is able to get.

Headed by Subodh Kumar, additional secretary, DoT, the committee has recommended that spectrum should be auctioned in blocks of 1+1 MHz. One band should be auctioned in 2+2 MHz band. One operator should not be allowed to hold more than 25 per cent of the total spectrum available in the market.

The operators will be required to pay a uniform charge of 3 per cent of annual gross revenues. This will be uniform for both CDMA and GSM players.

The committee has said that mergers and acquisitions of companies should be permitted, but they should pay a charge in the case of mergers and acquisitions.

In the case of mergers and acquisitions, spectrum contributes significantly towards the value of the company.

Currently, TRAI has recommended that there should be a lock in period of three years for the new licence holders to sell their equity.

At the end of the licence period of spectrum, the existing spectrum holder will have the right of first refusal. However, the company will have to pay a fee which would be based on the price arrived by most recent auction of spectrum in the same circle.