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The opinion given by the Supreme Court on allocating natural resources has thrown open the game for telecom companies.
Post this opinion, the Government has the option now to revert to the earlier First-Come-First-Served basis for allocating spectrum, which worked out cheaper for the operators compared to bidding in an auction.
“All options are open. We will take a decision on future allocation,” Kapil Sibal, Communications and IT Minister, said while replying to a question by Business Line .
“The Government’s position has been that the First-Come-First-Served policy followed while allocating licences was not flawed. Our position remains the same,” he said.
The apex court, in its opinion, said that public good should determine the allocation method. This means that the Government can opt against auctioning spectrum in the future on grounds that broadband services have to be made affordable to the consumers. A number of new spectrum bands are expected to be made available to the operators in the next 2-3 years.
This includes the 700 Mhz frequency band, which has been earmarked for high speed broadband services.
While TRAI has proposed to auction this frequency band, the Telecom Ministry can now look at other options including a beauty parade wherein spectrum is allocated to operators who promise to offer services at the cheapest tariff.
Silent on entry fee
The other major impact could be on the one-time fee to be paid by incumbent players for spectrum they already hold and at the time of renewing their 20-year licence. The Supreme Court declined to reply to a question on this issue.
The Government had asked whether the spectrum allotted to incumbent players since 1994 should be revoked or be charged a fee. The answer to this question is significant for mobile operators, including Airtel and Vodafone.
These players have asked the Government to take a decision on the one-time fee before the upcoming 2G auction so that they can take a position on whether to participate in the bidding or keep funds for paying the one-time charge.
The Government had also asked if the permission given to dual technology players, Reliance Communications and Tata Teleservices, was legal or not. But with the apex court declining to reply to these questions the ball is back in Kapil Sibal’s court.
“Now that there is clarity on constitutional authority of the Government on matters relating to policy, we will take decisions on all these issues,” the Minister said.
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