The finance ministry and the department of telecommunications (DoT) have decided to refer the matter whether the scarce 2G spectrum should be auctioned or not to the solicitor general of India (SGI).
The brief for the SGI would be to examine whether or not mobile operators are entitled to spectrum beyond the start-up 4.4 Mhz and also look into the legality of auction of spectrum beyond 4.4 Mhz to 6.2 Mhz and beyond.
The decision was taken at a recent meeting. While the finance ministry has been pressing for a spectrum auction, seeing the revenue potential, DoT has been citing legal problems.
DoT has strongly pointed out to the finance ministry that due to the scarcity of spectrum and limited competition, auctioning is an unviable method. A technical problem arises since 2G band allocations have not so far been done through auctions, and allocations have been done at different dates and rates to the service providers, deciding a cut-off date from which spectrum would be auctioned would be difficult.
Another problem put forward by DoT was that since the licence conditions provide for spectrum allocation of up to 6.2 Mhz, so rather than opting for the auction route at an initial level, the 6.2 Mhz spectrum allotted to the GSM players might be treated as ?threshold? point. Subsequent spectrum allocation can follow the auction mode. However, this would require changes in the existing guidelines.
Even if this methodology is adopted, since only a limited number of bidders will be eligible, the auction may not get the real market value of the spectrum.
Even the Telecom Regulatory Authority of India, which has recommended auction of 3G and wireless broadband spectrum has cited legal problems in taking the auction route for 2G spectrum.