In order to bring transparency to the allocation of wireless spectrum - the pricing of which is at the heart of corruption scandals rocking the country - the Telecom Commission has approved a policy framework that de-links licences from spectrum.
Under the new regime, 2G spectrum will have to be paid for at market rates by telecom service providers, while a separate entry fee will be charged for licences.
The new policy says price of spectrum will be decided by auctions, but allows sharing of 2G spectrum and "refarming" (reallocation) of spectrum in the 800 and 900 Mhz bands.
Currently, licences to provide telecom services come with 4.4 MHz of start-up spectrum. Licences are issued on a first-come first-served basis and the operators have to pay
Rs 1,650 crore as one-time entry fee for pan-India licences. This messy linkage resulted in the 2G spectrum scandal that came in for criticism from the Comptroller and Auditor General of India.
Now, the telecom panel has approved an entry fee of Rs 20 crore for providing services throughout the country, with no guarantee of spectrum.
Currently, operators have to pay an annual revenue share of between 6% and 10% of their gross revenue as licence fee. For high revenue generating circles such as metros, Maharastra and Gujarat, the licence fee is ten per cent, while for low revenue generating circles such as Bihar, Jammu & Kashmir, North East, the licence fee is 6% of the revenue. The commission has now set revenue share at a uniform eight percent.
The refarming of spectrum means existing operators means spectrum will be taken away from existing operators who will be allotted spectrum in the 1800 MHz band.
The 800 and 900 Mhz bands will be auctioned again.
In case 800 and 900 MHz band is not auctioned, the commission has approved that the operators should pay 1.5 times the prevailing price of 1800 MHz band.