Almost 16 months after the Telecom Regulatory Authority of India first submitted its recommendations, the spectrum trading and sharing guidelines were approved by the Telecom Commission on Thursday. However, the final notification is still awaited as the matter would now be referred to the Cabinet for a final nod.
“We have finalised the view on spectrum sharing and trading guidelines. We will try to send the norms to the Cabinet by the end of this month,” department of telecommunications secretary and Telecom Commission chairman Rakesh Garg said after the meeting.
While technically the matter does not require the Cabinet’s nod since the Telecom Commission itself is an inter-ministerial body, the latter still has decided to seek its approval.
Though Garg did not disclose to what extent the final guidelines approved by the TC differed from the ones originally sent by Trai, going by the back reference to the regulator it seems that there won’t be any large-scale departure from the original set of norms. The queries sought by the department of telecommunications were very incremental barring two points.
It wanted to know whether in the case of sharing administratively acquired spectrum the companies should be made to pay market price for the spectrum. In another case, it wanted to know whether this facility should be extended to operators only once they have paid the government their dues for excess spectrum held beyond 4.4. MHz in GSM and 2.5 MHz in CDMA. Trai had stuck to its original recommendations on all the points in its final reply to DoT.
If still the TC inserts these two clauses, the mechanism would be a non-starter.
However, if notified in its original form, the trading and sharing guidelines would be progressive and help operators in consolidating spectrum. However, it comes quite late.
Further, the spectrum caps would act as a major deterrent barring sharing between two big operators across circles. It is only smaller operators who would benefit by pooling their spectrum, which would not require them to set up more cell sites.
Comparatively, trading would be beneficial for the bigger operators as it would lead to targeted merger and acquisitions. For instance, an operator wanting more spectrum in, say, 3G can now buy it from another operator having spectrum in the same band but not having enough use for it. This way the first operator does not need to buy the second company lock, stock and barrel. However, any action on this front would come only once the target company has fulfilled its roll-out obligations or else this requirement would fall on the buyer.
Though Trai had recommended spectrum caps that would practically bar sharing of spectrum between any two big operators across circles, for the purpose of calculation of additional spectrum it had made some relaxation. However, any major gain on this front has been whittled away by levying an additional 0.5% spectrum usage charge on shared spectrum (see chart).
Spectrum sharing has been recommended by Trai in both spectrum won through auctions and the ones that are with the operators through the earlier allocation process. However, since the spectrum won in auction is liberalised airwaves, it can be used for all services if shared but the allocated ones can be used for the services for which they were given.
In case of trading there would be a 1% transfer fee on the transactional amount or prescribed market price, whichever is higher, and payable by the seller to the government. Further, spectrum cannot be traded for a part of a telecom circle and is applicable only on those radio waves that have been bought through an auction or paid for at market rates.