January 22 2020
2G: Govt in talks with Telenor and Sistema
10 February 2012

The very next day after the Supreme Court (SC) judgment on February 2, the Department of Telecommunications (DoT), the licensor for all the operators whose licenses were cancelled, wrote to the Telecom Regulatory Authority of India (Trai) asking it to put together a road map on the way ahead.

With the SC quashing the licenses, the operative part of the order was for the licensees to hand over the spectrum to DoT within 120 days. DoT sources told Mail Todaythat it has now asked Trai to give the necessary recommendations on the new auction process, even as the spectrum is surrendered by the nine operators to DoT. Crucially, all 123 licensees will have to return the spectrum by June 2.

DoT secretary R. Chandrasekhar confirmed that once Trai's recommendations on the matter come in they will initiate a formal auction process instantly.

DoT sources were categorical that in the new auction several operators, whose licenses have been invalidated, will be returning to participate because they already have business operations in India. It added that they have been having regular meetings with operators like Telenor and Sistema and the general perception was that they would return for the auction.

Once Trai's recommendations come in, DoT will take over and initiate a formal auction process. While it will do this 'as fast as possible', it needs to be remembered that the successfully implemented 3G auction in 2010 actually took 688 days before it saw the light of the day.

When contacted J.S. Sarma, Trai chairman, told Mail Today, "We are very clear that the SC has mandated that the process needs to be adhered to in two months. Our effort and endeavour is to deliver our recommendations in that time frame. We are gearing ourselves to do that."

There are two parts to this action plan - license conditions and guidelines for allocation of spectrum. As far as license conditionalities are concerned, Trai made it clear as far back as May 2010 that it will have to be a unified license. On January 16 this year, Trai modified the new unified license guidelines.

On the allocation of spectrum only through auction, Trai issued a pre-consultation paper on February 3 and expects comments to be in by February 15. While DoT believes that 120 days is required to fulfil the apex court's mandate, there are several balls in the air. One is finding a credible auctioneer for a process of this magnitude because as much as 540 mhz of spectrum has been freed. Moreover, a reserve price will have to be recommended by Trai and the eligibility criteria will have to be identified for a fair and transparent auction.

The sources also added that it is too premature to give a timeline on the auction, since it cannot be viewed in isolation against this backdrop. It is also being made clear that there will be no exit option for those who had offered to return licenses. Most importantly, the refund of entry fees to new 122 licenses is very unlikely. All said and done, spectrum pricing seems unlikely in the stipulated four month time.



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