TRAI releases pre-consultation paper on fresh auction of 2G spectrum

The Telecom Regulatory Authority of India today issued a pre-consultation paper for auctioning 2G radio spectrum across the country, following up promptly on the Supreme Court's Thursday order cancelling 122 licenses for 2G telecom services and calling for a fresh auction of the spectrum of over 500 Mhz that will thus be freed.

"Keeping in view the decision taken by the central government in 2011, TRAI shall make fresh recommendations for grant of licence and allocation of spectrum in 2G band in 22 service areas by auction, as was done for allocation of spectrum in 3G band," TRAI's principal Advisor Sudhir Gupta said in a statement.

The regulator has asked stakeholders to send in their comments by 15 February. The statement added that there will be no extension to the deadline set by the apex court (four months) for completing the process.

About 25 Mhz of 2G spectrum in each circle will get freed after the licences are cancelled. In addition, the department of telecommunications (DoT) has about 10 Mhz of spectrum available.

The price determined through this auction will also be used to fix the one-time entry fee for incumbent players.

Observers suggest that DoT may adopt the same bidding formula used for selling 3G spectrum, where operators had the chance of improving their offer in each round till the number of slots became equal to the number of players left in the fray.

The Supreme Court in its order had asked the government to seek fresh recommendations from TRAI on allocation of licences and spectrum through auction. It strongly held that the entire methodology of spectrum allocation in 2008 was arbitrary and unconstitutional.

Almost a year ago, TRAI had recommended fixing the price for 6.2 Mhz of pan-India start-up 2G spectrum at Rs10,972.45 crore, more than six times the cost of Rs1,658 crore at which the spectrum was allocated to new players whose licences have to be cancelled under the Supreme Court orders.

The recommended spectrum price varied from circle to circle. In case of contracted limit, the price ranges from Rs7.60 crore per Mhz in Jammu & Kashmir to Rs187.38 crore per Mhz in Tamil Nadu. For additional spectrum, the range is Rs 22.89 crore in Jammu & Kashmir to Rs431.95 crore in Andhra Pradesh.

Gupta said TRAI has already recommended that all future licences should be unified licences under 'spectrum management and licensing framework' guidelines set in May 2010. It has also said that spectrum should be de-linked from licences; a suggestion that the government has already adopted.

A television channel report quoted TRAI chairman JS Sarma as saying that the SC verdict will herald "brighter days" for the sector. Sarma also said he was happy that the Supreme Court had supported auctioning of spectrum.

TRAI has also placed `Draft Guidelines for Unified Licensing Regime' on its website on 16 January 2012 for comments of stakeholders.

TRAI has now requested stakeholders to send their suggestions and comments on the issue of ''allocation of spectrum in 2G band in the 22 service areas by auction.''

Stakeholders have to make written comments by 15 February 2012 in view of the time bound nature of exercise and no extension of time will be given, TRAI said.