Forty-six companies?ranging from property developers to television manufacturers?have added themselves to the queue for 575 telecom licenses to help script an amazing gold rush story. To ensure absolute transparency, it is no wonder that the competition commission has recommended the auction of spectrum available for 2G mobile services. Spectrum is the highway on which telecom services like voice and data travel. The recommendation has the obvious merit of making the process of allocation seem absolutely impartial. But the fly in the ointment is that the auction is not for a greenfield pasture but for an already populated highway where there are impatient, would-be operators awaiting free lanes for quite a while. To be sure, the auction method is a sure-shot way of eliminating non-serious bidders. However, the option could open up serious legal challenges to the final pricing of spectrum at a time when the lack of bandwidth is already making mobile customers restless and is fraying the much-heralded success of India?s telecom sector. Instead, it probably makes more sense to adopt the auction route to allocate fresh spectrum for new services like 3G. The alternative for 2G spectrum, on the other hand, could be to insist on tough conditions for current operators. To ensure that a scarce resource like spectrum is not hoarded, the current subscriber-linked allocation criteria should be made tightened, as suggested by Telecom Regulatory Authority of India. Reassessing the entry fee could be another option. This, incidentally, does not perpetuate any monopoly as the new players could always graduate to a new and broader spectrum where they can offer better alternatives.
In any case, as the airwaves are already largely occupied, even if the current spectrum is allocated on a first-come-first-served basis, the new incumbents might have to factor in a long wait in the 1,800 MHz band. Operators with licenses have been waiting for several months to get spectrum. By inviting applications for new licenses, therefore, the government seems to gotten itself into a tight corner. The rush for licenses is not surprising in the world’s fastest growing telecom market, with a subscriber base of about 25 crore and adding over 70 lakh new connections every month. But it would have been better to have framed a long-term spectrum allocation roadmap first before inviting new players to the party.
