The government should auction the spectrum freed after licence cancellation

According to Vodafone India, the government should put up the entire spectrum available for auction following the cancellation of 122 2G licences by the Supreme Court in 2012. Responding to the Telecom Regulatory Authority of India?s (TRAI) consultation paper on ?Valuation and Reserve Price of Spectrum? the operator has recommended that the reserve price of the spectrum should be such that it encourages operators to buy all the available spectrum put up for auction.

High reserve price is likely to leave the government with unsold spectrum which will amount to huge loss of country?s valuable resources. Vodafone India states that the affordability needs to be addressed while formulating policies for the desired market discovery of spectrum price through a successful, open and transparent auction. This will also help government achieve fair revenues through spectrum auction. The operator recommends that reserve price, auction process and spectrum-related policy features should be customised to prevent fragmentation and facilitate consolidation of spectrum. It adds that fragmentation impacts valuable overall traffic-carrying capacity of networks, thereby inflicting huge losses to the economy.

The company further points out that the exercise of determining reserve price for spectrum in the 1800 MHz and 2100 MHz band based on the historic market price from 2001 onwards and 2010 is a flawed process. This is so because telecom industry over the past few years has witnessed significant downswing.

Further, the operator has raised the issue of wastage of spectrum and lack of alignment between spectrum allocations and charging regimes. In its communication to TRAI, Vodafone India has underlined that the change in the allocation of block size from the earlier 200 kHz to the 1.25 MHz in the 1800 band in the November 2012 auctions has resulted in the underutilisation of spectrum. The 1.25 MHz block has inbuilt inefficiency leading to wastage of scarce spectrum by the operators and the spectrum is left unintentionally idle by the government.