A day before EGoM meeting, Montek favoured 6.2 MHz spectrum trigger

Written by fe Bureau | New Delhi | Updated: Oct 15 2012, 06:30am hrs
A day before the meeting of the inter-ministerial panel on a one-time levy for spectrum, Planning Commission deputy chairman Montek Singh Ahluwalia had suggested that the government charge existing operators for spectrum beyond 6.2 Mhz. The panel, of which Ahluwalia himself is a member, however, decided to levy the one-time charge beyond 4.4 Mhz.

The matter is likely to come up at the Cabinet meeting on Tuesday.

According to a letter written by him to the empowered group of ministers a day before the meeting October 8 Ahluwalia had explained how the telecom licence guaranteed contracted spectrum to operators until 6.2 Mhz, and not honouring that condition would amount to changing the rules of the game midway.

This has often been the reasoning cited by dual-technology players Reliance Communications and Tata Teleservices, who have received spectrum only until the initial 4.4 Mhz, but have been asking the government to allot them spectrum up to 6.2 Mhz like the GSM players.

Ahluwalia wrote the letter a day in advance as he said he would not be able to attend the meeting. Ahluwalia further said that while this was his view, the view of Attorney General GE Vahanvati should also be sought on the matter before the inter-ministerial panel took a final call.

The AG, meanwhile, also suggested that the government charge the operators for spectrum beyond the 6.2 Mhz threshold, as this was the contracted amount of spectrum guaranteed in the telecom licence issued to the operators.

However, the inter-ministerial panel decided to charge telecom operators beyond 4.4 Mhz, saying that doing it otherwise would create huge issues of perception and lead to a skewed public policy.

At one end, we are conducting the 2G spectrum auctions, wherein each new entrant will have to pay for all the spectrum; at the same time, how can the government go ahead and allocate certain amount of spectrum in the same 2G band free of cost to a few operators sources had said, explaining why the EGoM decided to charge everyone for spectrum beyond the 4.4 Mhz threshold.

However, Ahluwalias letter specifically says that citing a level-playing field (as mentioned above) as the reason to opt for 4.4 Mhz is a faulty one, since in any field, late entrants always face different circumstances from the incumbents.

Different exchange rates, different interest rates, different rates for land acquisition and, finally, different market perceptions about the sector. They should not, however, have to face the additional risk of the government deciding to change the goal posts retrospectively, he had said.

The dual-technology industry body, Auspi, has, meanwhile, written a six-page letter to the PMO ,complaining how the decision of the EGoM is illegal and biased since it favours the incumbent GSM operators and, hence , should be immediately shelved.