The Telecom Regulatory Authority of India (Trai) has issued its recommendations for auctioning the mobile spectrum licences recently canceled by the Supreme Court. The recommendations build on its earlier proposals for a new unified licensing framework, which would introduce more market-based pricing for spectrum and technology-neutral licences. The court asked the regulator to make a proposal for auctioning the spectrum in the public interest, after the previous awards process, on a 'first come, first serve' basis, was deemed inappropriate and overturned.
The latest proposal would see the 1800MHz band auctioned first, in the current financial year ending March 2013, with reserve prices based on the final prices achieved in the 3G auction in 2010. Any leftover spectrum in this band could be awarded to existing operators with 4.4MHz or less in the band, at the auction price. The prices in the 1800MHz auction would set a reference price for the next auction of frequencies in the 800MHz band, also proposed for the current fiscal year. The auction of these bands is urgent for existing operators, who face a court order to terminate services under their previous licences by June. Trai proposed subsequent auctions of the 900, 1800 and 2100 MHz bands in the next financial year, as part of refarming of these bands ahead of the expiry of current licences and new frequencies coming available. Auctions of the 700 and 2300MHz bands would come in the following year, when the LTE ecosystem for these bands is more fully developed.
Trai has proposed significantly higher reserve prices for the lower-frequency bands, based on prices achieved in other countries, due to the higher efficiency of these bands. The reserve price for the 800 and 900MHz bands would be at least twice that of the 1800MHz band, and the 700MHz band at least four times higher. Prices achieved in the 3G auction in 2010 were already significantly higher due to scarcity; spectrum was previously granted automatically with operator licences. Similar to the 3G auction in 2010, the auction reserve prices will vary according to region. In exchange, operators who pay auction prices for spectrum would be subject to a lower annual levy of just 1 percent of annual gross revenue. They would also be allowed to trade spectrum to obtain contiguous frequencies.
Existing spectrum holders would also be allowed to make their licences technology-neutral permits by paying a fee based on the auction prices achieved for that band. Any existing holder of a CMTS, UAS or unified licence, or company qualifying for a unified licence could participate in the auctions, and the new licences would run for 20 years. Participants would be subject to spectrum holding caps of 50 percent in a given band in the service area and 25 percent of all spectrum in a service area. Other proposals include taking back for auction spectrum from state operator MTNL in Mumbai, which has been under-utilised, Trai said.
