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Auctioning the commons

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HT reported on one consequence of the supreme court ruling which canceled 122 telecom licences:

Inching closer towards auction of spectrum, sector regulator Trai has issued consultation paper on auction of spectrum to seek views of various stakeholders and then give its recommendation to the Department of Telecom. “On the basis of the comments received from the stakeholders on the pre-consultation paper and considering the international practices, the draft consultation paper on ‘auction of spectrum’ has been prepared,” Trai said in a statement issued late Wednesday.

The key issues raised in this paper are amount of spectrum to be auctioned, liberalisation and reframing 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 trading.

The consultation paper shows 60 Mhz and 413.6 Mhz of spectrum will be vacated in 800 Mhz and 1800 Mhz spectrum bands respectively from the cancellation of 122 2G licences by Supreme Court.

In the consultation paper issued, Trai has put forward various models that can be used for auction. Similarly for deciding minimum value for spectrum to start auction, Trai has not specifically indicated price but has asked for model that should be used for determining the base price.

Most of the Telecom operators, whose licence has been cancelled by Supreme Court, have asked for fixing it at around Rs 1,658 crore which is equivalent to the licence fee that has charged for allocation of pan-India licence to new telecom players after 2001.

Trai has given time till March 21 for written comments and March 28 for counter-comments on this consultation paper.

Telecom Lead lists some of the questions raised by TRAI:

* Should there be a separate cap on the total amount of spectrum one can hold; if so, what amount should it be?

* Who all should be eligible to participate in the auction? (1) Only licensees whose licenses have been cancelled; (2) Only eligible applicants as on 10.01.2008; (3) Only licensees whose licenses have been cancelled and all new eligible entrants at the time of auction; or (4) 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 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?

* Should Spectrum trading be allowed in India?

* Can spectrum be allowed to be mortgaged for raising capital for telecom purposes?

The spectrum is almost unique among public resources in that its use now does not preclude future use. This is not true of mines, for example; once ore has been removed, the mine becomes valueless. Now with the principle of auctioning being forced on the government, it will be interesting to see how policies for the use of different kinds of public resources evolve in future.

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Written by Arhopala Bazaloides

March 8, 2012 at 7:08 pm

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