Rigid line emerges on liberalised spectrum regime

The Empowered Group of Ministers (EGoM) on telecom has dropped a clause in rules which, if not reversed, could create a significant problem for incumbent operators.

Under the clause, incumbent operators had the option of either continuing with their existing licence terms of offering only 2G services in the 1,800-MHz band or migrate to a liberal spectrum regime but only after paying the auction-determined price.

Under the liberalised regime, operators could have used their spectrum for any services - 2G, 3G or 4G.

The decision could have serious repercussions on incumbent operators. They now have to migrate to the new regime, even if they want to continue giving only 2G services and are not interested in using the spectrum for other services.

It would especially adversely impact the newer incumbents, who have between nine and 15 years to go before their 20-year licences come for renewal. These include Aircel, Tata Teleservices and Reliance Communications, among others.

They would now have to pay the market-related price for 2G spectrum for getting a 20-year licence with liberalised spectrum.

The EGoM would meet again tomorrow under Agriculture Minister Sharad Pawar, who has replaced former finance minister Pranab Mukherjee (who quit to file his nomination for the Presidential election), to decide on the contentious issue of a base price for the 2G auction.

The draft minutes of the EGoM meeting on June 5, when Mukherjee was at the helm, while stating that in future all spectrum to be assigned would be liberalised, offered an option for incumbent players.

The decision was that these operators "may be allowed to convert their existing 1,800-MHz spectrum to liberalised spectrum for a period of 20 years on payment of the auction-determined price".

However, the period of 20 years would be subject to the licensee acquiring a unified licence on expiry of the existing one. The entry fee paid by the operators already could be adjusted on pro rata basis on only one occasion, when the operators converted their spectrum into a liberalised one. Operators would still have the option to continue in the old regime.

But, the final minutes of the meeting circulated in the government have this clause deleted and merely say all spectrum in future would be liberalised.

Photograph: B Mathur/Reuters