DoT notifies key steps for future spectrum assignments; removes financial bank guarantee requirement to cover for annual spectrum instalment

The Department of Telecommunications (DoT) has notified key steps for future spectrum assignments to telecom service providers (TSPs). As per the new notification issued by the DoT, future auctions will neither require a financial bank guarantee (FBG) to fund yearly spectrum instalments or a performance bank guarantee (PBG) to fulfil roll-out commitments. It added that it will accordingly alter the eligibility requirements for bidders to participate in the next spectrum sale to ensure that they have sufficient financial capability.

Further, the DoT has also notified other measures to enhance the ease of doing business in the sector. These measures include increasing the validity of future access spectrum assignments to 30 years, defining a schedule for future spectrum auctions, providing an option for surrendering spectrum after 10 years, removal of spectrum usage charge (SUC) for future auction, removal of additional SUC of 0.5 per cent in case of spectrum sharing and new guidelines for spectrum sharing.

Commenting on the development, Lt. General Dr. S.P. Kochhar, director general, Cellular Operators Association of India (COAI), said, “We appreciate the steps taken by the government with regard to the future spectrum assignments to the TSPs. The removal of FBG and PBG requirements, increasing the validity of future access spectrum assignment to 30 years, defining a schedule for future spectrum auctions, providing an option for surrendering spectrum after 10 years, removal of SUC for future auction, removal of additional SUC of 0.5 per cent in case of spectrum sharing and new guidelines for spectrum sharing are welcome steps which will reduce the financial burden on TSPs and will go a long way in enhancing the ease of doing business in the telecom sector.”

In addition, the DoT has sought the Telecom Regulatory Authority of India’s (TRAI) recommendations on upfront payments, moratorium periods, and the number of deferred payment instalments, after extending the right to use airwaves to 30 years from 20 years now.

Moreover, the DoT has formally allowed telcos to surrender spectrum after 10 years. They will, however, have to inform the department one year in advance and will be required to pay a surrender fee. The DoT stated that it has asked the TRAI for recommendations on surrender conditions and fees.