Based on comments received from stakeholders on the pre-consultation paper issued by the telecom regulatory Authority of India (TRAI) on `auction of 2G spectrum?, TRAI has released a draft consultation paper on Auction of 2G spectrum. Apart from stakeholder views the draft also keeps in mind best practices followed internationally.

The consultation paper notes that the recently cancelled 122 licences by the Supreme Court, will release 60 Mhz and 413.6 Mhz of spectrum available in 800 Mhz and 1800 Mhz spectrum respective bands.

TRAI has not specified minimum price for spectrum to start auction but has asked for model that should be used for determining the base price.

The key issues raised in the Consultation paper are quantum of spectrum to be auctioned, liberalization of the spectrum, refarming of spectrum in 800/900 MHz bands, structure of auction, spectrum block size, eligibility criteria for participating in the auction, reserve price, roll out obligations, spectrum usage charges and spectrum trading.

TRAI has also asked for inputs to arrive at the right model to be used for determining the base price. Even as most telecom operators, whose licences have been cancelled are insisting that it should be fixed at around Rs 16.58 billion, which equals the licence fee that was charged for allocating pan-India licence to new telecom players after 2001.

Some of the key consultation issues put up by TRAI for consultation?.

  • What are the key objectives to be kept in mind in the auction of the spectrum
  • The amount of spectrum that needs to be auctioned
  • Should the spectrum be liberalised before it is put to auction?
  • For the refarming of 800 and 900 MHz bands from the existing licensees, which of the options be adopted
  • For new technologies e.g. UMTS/LTE, 5 MHz is the minimum amount of spectrum required. Certain licensees have only 4.4 MHz spectrum in 900 MHz band and 2.5 MHz spectrum in 800 MHz band. What are the possible options in case of such licensees?
  • Some GSM spectrum allocation may be interleaved between operators therefore to avoid fragmentation, the reconfiguration between operators may be required. Whether frequency reconfiguration is required and what are the challenges and possible solutions?
  • Should the refarming of spectrum in 800/900 MHz bands be dealt independently or should a comprehensive approach be adopted linking it with the availability and auctioning of 700 MHz band?
  • When should 700 MHz spectrum be auctioned?
  • Should the auction in 700 MHz band be linked with the granting permission for the liberalised use of 800/900 MHz band?
  • How much spectrum in 700 MHz band should be put to auction initially and what should be the amount of spectrum which a licensee should be allowed to win in that auction?
  • What should be the structure of the auction process?
  • Should auction be held in single stage or multi stage?
  • Should there be a simultaneous auction for spectrum in 800 and 1800 MHz bands?
  • What should be the block size of the spectrum?
  • Should the block size be dependent on the frequency? If so, what should be the block size in each band?
  • Should there be a cap on amount of spectrum one can bid? If so, what should it be?
  • Should there be a separate cap on the total amount of spectrum one can hold, what amount should it be?
  • Should there be a cap on the amount of spectrum one can hold with respect to sub-GHz spectrum?
  • Who should be eligible to participate in the auction?
  • -Only licensees whose licences have been cancelled;
  • -Only eligible applicants as on 10.01.2008;
  • -Only licensees whose licences have been cancelled and all new eligible entrants at the time of auction
  • -Open to all including the existing Licensees.
  • What should be reserve price per MHz of spectrum in the year 2012 for 1800 MHz band?
  • What should be the reserve price per MHz of spectrum in the 700/800/900 MHz bands?
  • Whether the reserve price should be uniform across the country or service area wise?
  • What should be the roll out obligations linked to the auctioned spectrum?
  • What should be the annual spectrum usage charge for the spectrum being auctioned?
  • Should the spectrum usage charge be in line with the present criteria of escalating charge with the amount of spectrum holding or a fix percentage as was done for 3G and BWA spectrum?
  • What should be the period of validity of spectrum?
  • What should be the period of price of spectrum?
  • Should the government allow deferred payment schedule of the spectrum auction fee, or should the payment be upfront in nature?
  • Should Spectrum trading be allowed in India?
  • What should be the eligibility criteria to trade the spectrum?
  • Whether the spectrum assigned for 3G and BWA services will be allowed to trade?
  • Can spectrum be allowed to be mortgaged for raising capital for telecom purposes?

For TRAI responses to these issues are important, in order to give its recommendations on 2G spectrum auction in the stipulated four months (starting February 2012) as ordered by the Supreme Court. TRAI has therefore asked stakeholders to send in their comments by March 21, 2012 latest.