KOLKATA/NEW DELHI: The prime minister’s office (PMO) is learnt to have told the department of telecommunications (DoT) that the entire exercise of issuing start-up GSM spectrum to new entrants should be frozen till the government establishes the “true economic value of such spectrum in a fair, transparent and equitable manner”.
The PMO, it is learnt, has stressed that “the communications ministry needs to realise that radio spectrum is a finite and scarce national resource, which is why, all licences bundled with start-up spectrum, must be purely issued based on economic principles”.
The PMO’s intervention could hurt the GSM ambitions of CDMA operators Reliance Communications, Tatas, HFCL and Shyam Telecom, who want to offer services based on GSM technology. The PMO is said to be unhappy with the Union communications ministry’s handling of the protracted spectrum row, which shows no signs of an early resolution, sources added.
As of now a pan-India licence to offer 2G telecom services, which costs Rs 1,651 crore, comes bundled with 4.4 MHz of GSM spectrum. Service providers are only charged a separate fee for this initial spectrum, but are only mandated to pay a percentage of their annual revenues as spectrum fee.
While this could not be independently confirmed, it is understood, that the PMO is favourably disposed to the auctioning of 2G spectrum for both new entrants and existing GSM operators (read: Idea, Vodafone and Spice) whose applications for new licences/spectrum are languishing at the DoT for months. This can imply that the licence fee of Rs 1651 crore will not guarantee spectrum as telcos will have to bid for radio frequencies.
“The PMO is also aware that the telecom regulator TRAI, in its February 2003 recommendations, had suggested the bidding route for new licences that came bundled with spectrum, which effectively implies auctioning of 2G spectrum for new entrants, including CDMA players keen to enter the GSM club through the dual technology route,” a senior bureaucrat close to the developments told ET.
When contacted, a top DoT official said that the department had not received any directive from the PMO. The official added that the department had already constituted an internal committee to determine the economic value of the 4.4 MHz of start-up spectrum, which would be charged to all new entrants, in addition to the licence fee of Rs 1,651 crore.
“The committee will submit its report soon, possibly in the next one week,” the DoT source added. All existing operators who want additional spectrum will also be charged ‘the economic value’ for the quantum of extra frequency they get, a top DoT source had earlier told ET, while adding the prime minister was referring to this additional spectrum fee when he said that the government must not lose sight of the revenue potential from this scarce resource.
While the PMO has not named any specific company, it has indicated to the DoT that no future allocation of spectrum should be done in a way that subverts the system or robs the government of a substantial revenue opportunity. “Ideally, the DoT would do well to establish auction mechanisms for each spectrum band as there are several tried and tested auctioning formulae,” said a top government official close to the PMO.
The PMO, it is learnt, has stressed that “the communications ministry needs to realise that radio spectrum is a finite and scarce national resource, which is why, all licences bundled with start-up spectrum, must be purely issued based on economic principles”.
The PMO’s intervention could hurt the GSM ambitions of CDMA operators Reliance Communications, Tatas, HFCL and Shyam Telecom, who want to offer services based on GSM technology. The PMO is said to be unhappy with the Union communications ministry’s handling of the protracted spectrum row, which shows no signs of an early resolution, sources added.
As of now a pan-India licence to offer 2G telecom services, which costs Rs 1,651 crore, comes bundled with 4.4 MHz of GSM spectrum. Service providers are only charged a separate fee for this initial spectrum, but are only mandated to pay a percentage of their annual revenues as spectrum fee.
While this could not be independently confirmed, it is understood, that the PMO is favourably disposed to the auctioning of 2G spectrum for both new entrants and existing GSM operators (read: Idea, Vodafone and Spice) whose applications for new licences/spectrum are languishing at the DoT for months. This can imply that the licence fee of Rs 1651 crore will not guarantee spectrum as telcos will have to bid for radio frequencies.
“The PMO is also aware that the telecom regulator TRAI, in its February 2003 recommendations, had suggested the bidding route for new licences that came bundled with spectrum, which effectively implies auctioning of 2G spectrum for new entrants, including CDMA players keen to enter the GSM club through the dual technology route,” a senior bureaucrat close to the developments told ET.
When contacted, a top DoT official said that the department had not received any directive from the PMO. The official added that the department had already constituted an internal committee to determine the economic value of the 4.4 MHz of start-up spectrum, which would be charged to all new entrants, in addition to the licence fee of Rs 1,651 crore.
“The committee will submit its report soon, possibly in the next one week,” the DoT source added. All existing operators who want additional spectrum will also be charged ‘the economic value’ for the quantum of extra frequency they get, a top DoT source had earlier told ET, while adding the prime minister was referring to this additional spectrum fee when he said that the government must not lose sight of the revenue potential from this scarce resource.
While the PMO has not named any specific company, it has indicated to the DoT that no future allocation of spectrum should be done in a way that subverts the system or robs the government of a substantial revenue opportunity. “Ideally, the DoT would do well to establish auction mechanisms for each spectrum band as there are several tried and tested auctioning formulae,” said a top government official close to the PMO.
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