Cabinet nod to liberalise spectrum at Trai rates; RCom gains

The Union Cabinet has cleared liberalisation of spectrum -- allocated without auction to telecom companies -- at Trai recommended price with the balance being collected after deriving market rate through bidding.

The Cabinet decision taken on Wednesday will enable Reliance Communications to liberalise its spectrum in four telecom circles, where auction determined price is not available, for Rs 1,300 crore (Rs 13 billion).

A liberalised spectrum allows telecom operators to use any technology to deliver mobile services like 3G and 4G.

Besides, they will be able to introduce new technologies and share and trade it with other operators for its efficient use.

"The meaning of this Cabinet decision is that wherever administratively allocated spectrum is available, whose liberalisation is sought and whose market determined price is not available, then in that case Trai's recommendation on auction for price shall be taken as provisional standard and after actual auction, the balance will be taken," Telecom Minister Ravi Shankar Prasad said on Wednesday.

Earlier, telecom firms were given 4.4 MHz spectrum alongwith licence for Rs 1,658 crore (Rs 16.58 billion) for pan-India operations and later they were entitled to get another 1.8 MHz on Wednesday fulfilment of certain subscriber-based criteria. Some telecom operators were allocated even more spectrum after qualifying some criteria without auction.

Spectrum allocated in this manner could be used only to provide service as allowed in the licence.

The previous government had decided that the operators should pay for holding spectrum above 6.2 MHz retrospectively, from July 2008 to January 1, 2013.

After that, for spectrum above 4.4 MHz, they would have to pay for the remaining period of their licences based on auction held in November 2012.

Prasad said the Cabinet had earlier decided that liberalisation of spectrum will be done on the basis of market determined price.

"It was found that in 800 Mhz spectrum band, market price was not available in many states. Like in some places it was not available for sale and in some it was not sold (in

auction). There was a view that such question can arise in case of other spectrum band as well," he said.

Prasad said that the government sought recommendations of Telecom Regulatory Authority of India on this issue.

Trai suggested that government can provisionally liberalise spectrum on price suggested by it for auction and take undertaking from companies that it will adjust rest of the price when actual auction takes place.

"Since the Cabinet decided to liberalise spectrum on market determined price. So we sought this convenience from Cabinet that in future if such situation arises then we act as per recommendation of Trai so that we need not approach Cabinet time and again," Prasad said.

"Based on the recommendations of Trai, a sum of Rs 1,300 crore (Rs 13 billion) likely to accrue by this process," a government spokesperson tweeted.

RCom had applied for liberalising its 800 MHz spectrum in 20 circles a few months back.

The company had already paid Rs 5,383.84 crore (Rs 53.83 billion) as spectrum liberalisation fee for 16 telecom circles.

Inter-ministerial panel Telecom Commission has backed liberalisation of 800 MHz spectrum in circles where a market-determined price is not available.

The four RCom circles are -- Kerala, Karnataka, Rajasthan and Tamil Nadu -- where a market determined price was not available in the 800 MHz band.

The Cabinet approval allow RCom to liberalise its spectrum in the four circles by paying about Rs 1,300 crore (Rs 13 billion).

As per previous decision, DoT had issued demand notice to telecom operators on January 9,2013.

The government expected to get Rs 4,251.83 crore (Rs 42.51 billion) from retrospective charges, and Rs 18,925.82 crore (Rs 1,89.25 billion) from prospective charges for excess radio waves held by mobile operators at that time.

In all, about Rs 23,177 crore (Rs 231.77 billion) was expected from levy of

one-time spectrum fee in 2013.

State-owned BSNL was issued demand of around Rs 6,912 crore (Rs 69.12 billion), followed by Bharti Airtel Rs 5,201 crore (Rs 52.01 billion), Vodafone Rs

3,599 crore (Rs 35.99 billion), MTNL Rs 3,205 crore (Rs 32.05 billion), Idea Cellular Rs 2,113 crore 0r Rs 21.13 billion (includes Rs 231.5 crore or Rs 2.31 billion of Spice), Aircel Rs 1,365 crore or Rs 13.65 billion

(includes Rs 14 crore of Dishnet), Loop Mobile Rs 606 crore (Rs 6.06 billion)

and Reliance Communications Rs 173 crore (Rs 1.73 billion) for liberalisation.

The government has also given option to telecom operators, who are not willing to pay the one-time fee to surrender their additional and excess spectrum.

However, telecom operators have challenged the decision and is still sub-judice.

Image: A child plays with a mobile handset. Photograph: Reuters

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