The Department of Telecommunications (DoT) has put the upcoming 2G spectrum auction on the fast track.
DoT has released the first set of guidelines pertaining to the process. Interestingly, the long-standing issue of determining the reserve price of the spectrum has been left for a later date.
As per the guidelines, the objectives of the auction are multifold and include obtaining a market determined price through a transparent process, ensuring that spectrum is not hoarded, encouraging competition in the sector, promoting rollout of telecom services and maximising revenue from the auctin. The spectrum put up for auction will be valid for 20 years.
DoT has said that the spectrum auctioned will be liberalised, which means that operators will be able to use the spectrum obtained in either band to provide any service. operators are permitted to convert the existing spectrum they hold in the 1800 MHz band to be liberalised for 20 years, on condition that they pay the market determined price for the resource.
This 20-year period will be subject to the licencee acquiring a unified licence or if their existing licence expires. In these cases, the entry fee paid will be adjusted on a pro-rata basis only once when the company converts its existing spectrum to liberalised spectrum.
With regard to the process itself, DoT has said that the auction will be carried out simultaneously and in multiple rounds. The bidding will be area-wise and the reserve price of spectrum will be determined for each service area.
DoT has said that spectrum in the 1800 MHz and 800 MHz will be put up for auction. To be eligible for bidding, an operator must hold a UAS licence or must meet the criteria required to fulfill the conditions of the same. The companies facing licence cancellation as per the Supreme Court?s verdict in the 2G spectrum case will be considered new players.
DoT?s guidelines also pertain to the amount of spectrum and the number of blocks to be auctioned. In the 1800 MHz band, the size of the block to be auctioned is 1.25 MHz and a minimum of eight blocks (of 1.25 MHz each) are to be sold.
Additionally, DoT has included a provision of auctioning three blocks of spectrum of 1.25 MHz each depending upon availability. This will be done to ?top up? the eight spectrum blocks put up for auction to meet the requirements of the new players, if deemed necessary.
Existing operators will be permitted to bid for a maximum of two spectrum blocks of 1.25 MHz each, while new players can compete for a minumum of four blocks of 1.25 MHz each. Over and above this, new players can bid for one more block of 1.25 MHz.
In the 800 MHz band, the block size of the spectrum is 1.25 MHZ and three blocks of this size will be made available. Moreover, one additional block will be available as a ?top up?.
Existing players bidding for spectrum in this band will be permitted to do so for one block and new players for two. The latter will be eligible for an additional block of spectrum as well.
However, a number of issues are left unaddressed by DoT. Apart from the vital issue of reserve price of spectrum, the terms of payment, annual spectrum usage charge and the operators? rollout obligations are yet to be determined.
