Airwave-starved telecom companies can heave a sigh of relief with the Department of Telecom (DoT) finally coming out with the rules for spectrum trading on Tuesday.
However, some of the guidelines issued by the government could deter mobile service providers from trading in spectrum actively to meet their shortage for it.
According to some of the telecom operators, whose executives spoke off-record, two major norms which have disappointed them were the charge of non-refundable fee of 1% of transaction value, or 1% of the prescribed price of traded spectrum, whichever was higher, to the buyer and the inclusion of amount received from spectrum trading in the adjusted gross revenue (AGR) for the computation of license fee and spectrum usage charge (SUC).
Mahesh Uppal, managing director of telecom consultancy firm ComFirst India, said to the extent that spectrum trading would improve the situation from what it was earlier, when there was no other source available to telcos for acquisition of spectrum other than government auctions, in that sense it was a move forward. He, however, felt that trading of spectrum was best done when there was sufficient flexibility for the market players and there were no disincentives. According to Uppal, the government has put some impediments in the way of free trading by imposing 1% fee on the transacted value and partial price control. “The players have not been given full freedom to determine the price at which they would like to trade. Governments should leave this (pricing) entirely to the players involved but hasn’t ,” he said, adding, the players cannot sell below market price. “Who determines the sale price is an important policy issue. I (read a telco) may want to trade at a certain commercial price and if I (read a telco) can negotiate that price then I should be allowed to trade at that price”.
As per the rules notified by the DoT, trading in access spectrum was permitted across all bands for access services between two access service providers.
It has disallowed leasing, specifying that only outright transfer of right to use spectrum would be allowed. The guidelines also clearly states spectrum bands and block sizes for trading in airwaves and has kept the validity period of the spectrum acquired through trading same as that got through auction.
Like in spectrum sharing, information on proposed transactions for spectrum trading would have to be given to the government 45 days before the actual date of trading.
Under the trading norm, a seller would have to clear all dues before inking a deal for it. In addition, the government has given itself the power to recover dues that may not have been brought to their notice and for which there was an oversight from the buyer, seller or jointly.