The Supreme Court had given a 4-month deadline for completion of the auction process
While scrapping 122 telecom licences earlier this month, the Supreme Court had given a four-month deadline for completion of the auction process for allocation of 2G spectrum. But an internal note prepared by the Department of Telecommunications (DoT) states that it may take at least 400 days to complete the entire process.
The Supreme Court order, which termed the spectrum allocation process of the Congress-led United Progressive Alliance (UPA) government in 2008 as ‘illegal' and questioned the ‘first-come, first-served' policy, has put the DoT in a bind, forcing it to rethink on three crucial issues — cancelation of other licences not granted through auction prior to 2008; charge to be levied on dual technology players; and impact of 3G spectrum holders whose 2G licences have been cancelled.
The tentative road map and timelines for auction chalked out by the DoT suggests that the Telecom Regulatory Authority of India (TRAI) will take 60 days to make recommendations, while the government will take 95 days to approve these recommendations. Apart from the DoT, the Empowered Group of Ministers (EGoM) and the Union Cabinet will have to decide on issues such as reserve price of spectrum and blocks to be auctioned.
And going by its experience of the 3G spectrum auction held in May 2010 that took over a month, the DoT feels that it would take 245 days for completion of auction, completion of payments by successful bidders and allotment of frequencies. Thus, the entire process will take 400 days.
Significantly, the Supreme Court, in its order, had said: “Within two months, TRAI shall make fresh recommendations for [the] grant of licence and [the] allocation of spectrum in [the] 2G band in 22 service areas by auction, as was done for the allocation of spectrum in [the] 3G band. The Central Government shall consider the recommendations of TRAI and take an appropriate decision within the next one month, and fresh licences be granted by auction.”
Apart from the Supreme Court's deadline that the DoT is struggling to meet, the department is studying the implications of the landmark judgment on other licences not given through auction prior to 2008. This includes licences and spectrum given to many leading players. Between 2004 and 2007, the DoT gave 51 telecom licences on ‘first-come, first-served' (FCFS) policy. The DoT is also looking at 22 telecom licences given in 2001 under the BJP-led NDA regime as per the FCFS policy.
Similarly, in January, 2008, the DoT had also given 35 dual technology licences (GSM spectrum to CDMA players) at 2001 rates, and now the department is in a fix as to how to recover money from these players as they also got the same spectrum like other 122 licensees whose licences have been scrapped.
Yet another challenge that the DoT faces is the impact of the apex court order on 3G spectrum holders whose 2G licenses have been cancelled. There are two players who are likely to get impacted due to this — Idea Cellular (whose nine licences have been cancelled) having 3G spectrum in two circles — Punjab and Jammu and Kashmir; and S-Tel (six licence cancelled) that successfully bid for 3G spectrum in three circles of Orissa, Bihar and Himachal Pradesh. And entry of new players in the 2G space will change the dynamics of 3G and wireless broadband operations that is still to gain momentum in the country.