DoT moves SC to pre-empt stay order on spectrum auction

The department of telecommunications (DoT) has moved the Supreme Court to pre-empt any stay on the auctions of spectrum slated to start on 4 March. The case is likely to come up for hearing on today.

The government is expecting to earn about Rs1,00,000 crore from the sale of spectrum, in the 800, 900, 1800 and 2100 MHz bands, in the first big auction of spectrum by the National Democratic Alliance government.

According to reports, Bharti Airtel, Idea Cellular and Reliance Telecom have separately moved court against conditions mentioned in the notice inviting application, which is a legal framework for spectrum auction. Idea Cellular has filed a petition in the Allahabad High Court against tougher auction rules. All the cases are expected to come up for hearing next week.

Telecom companies have gone to court against the DoT's unsatisfactory responses on various issues, including spectrum caps. The companies had asked the DoT to correct an anomaly in the overall spectrum cap by setting it on the basis of air waves available with the DoT for allocation to commercial use even if they were not being put up for auction. The companies contend that spectrum caps cannot be lower than ones prescribed in prior auctions.

Sistema Shyam Teleservices has asked the telecom appellate tribunal to direct the DoT to make its spectrum holdings in the 800 MHz band contiguous or continuous.

Recently, Bharti Airtel and Reliance Telecom won a ruling in the Tripura High Court allowing them to bid for the entire amount of spectrum currently in their use, 4.4 MHz each, in the Northeast circle and not a minimum of 5 MHz mentioned in the notice.

Telecom companies have also expressed concern over the high earnest money needed for the auction. The average earnest money as a percentage of the reserve price for the February 2014 auction of 1800 MHz was 22 per cent. For the 2015 auction, this has been set at 33 per cent on a nationwide basis.

The sharp increase in earnest money in the latest auction was surprising because the General Financial Rules (GFR- Rule 157) of the government specified the amount of bid security should range between 2 per cent and 5 per cent of the estimated value, the telecom companies said in their submissions to the DoT.