BW Communities

A New Twist In The 2G Auction Tale

Anup Jayaram Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[After going through many a twist and turn, a panel of ministers headed by former finance minister Pranab Mukherjee recently decided to auction between 8 MHz and 13.75 MHz of spectrum in the 1,800 MHz band later this year. When everything seemed to have been settled except the base price of spectrum, suddenly there is a twist in the tale. Recently, Reliance Communications (R-Comm) and then Aircel moved the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) seeking the government to provide them an additional 1.8 MHz of spectrum inkey circles at no additional cost. If that goes through, then the government plan to auction spectrum in the 1800 MHz band by August 31 as mandated by the Supreme Court could be hit. Much earlier, CDMAoperator Sistema Shyam Teleservices had filed a similar petition for a third carrier (1.25 MHz) in November 2011 for five circles. All these companies have sought that the Department of Telecommunications (DoT) fulfill its contractual obligations by providing these companies with the balance of the contracted spectrum before going ahead with the auction process. Both Aircel and RCom were given 4.4 MHz of spectrum in the 1800 MHz band in January 2008. These operators have sought additional spectrum under the subscriber addition norms. Aircel has asked the court to declare DoT's actions as a 'breach of terms of the licence' and award damages for the 'loss suffered due to withholding and non-grant of spectrum by DoT.' So what does this mean? Based on how the TDSAT responds to the applications, other telecom operators are likely to file their applications. Says an official of a leading telecom company: "The immediate impact would be that the entire process of auctioning spectrum could get delayed." That would benefit incumbents while putting pressure on new operators. Second, if spectrum is provided to these companies, the spectrum reserved in the 1800 MHz band for the proposed auction could come down. That would result in lower revenues for the government from the auction, while again putting pressure on companies bidding for spectrum. Says Rajan Mathews, director general, Cellular operators Association of India:  "The real impact could be on the process of re-farming spectrum in the 900 MHz band. The TRAI has provided for spectrum in the 1800 MHz band for operators who would have to release their 900 MHz spectrum when their licences come up for renewal starting 2014. That process could be stuck for lack of spectrum." If other operators seek additional spectrum in the 1800 MHz band, then the amount of spectrum that the government had reserved for re-farming would be substantially reduced. While the government has to go ahead with auctioning spectrum under the Supreme Court order, the re-farming could get delayed. The other option is to get additional spectrum vacated from defence authorities. Says Hemant Joshi, Partner, Deloitte Haskins & Sells says: "What the country needs is a strategic and comprehensive view rather than ad hoc measures. That could help reduce the conflicts in the sector."Finally, it all depends on what TDSAT says. However, nothing stops the operators from moving the courts. In that case, the auction process could well get delayed. That's not something that the operators want.