Spectrum Sharing Guidelines Likely Only After Spectrum Auctions

The issuing of the guidelines for sharing of spectrum is likely to be delayed further and the same may be issued after the forthcoming spectrum auctions next month. The guidelines would be finalised and are likely to be issued after the auctions, upon finalisation.

The finalised guidelines were earlier supposed to be issued in December last year, however the same have not yet seen light of the day. Further, even the recent Notice Inviting Applications issued by the Department of Telecommunications (“DoT”) for the upcoming auctions in February, 2015 had indicated the guidelines for these would be notified in due course.

As per news reports, the DoT is not keen on announcing the guidelines before the auctions as this might prevent companies from aggressive bids is causing a revenue loss to the exchequer. However, the Telecom Commission, the highest policy making body of the DoT, is yet to take a final decision on the issue. Our previous post on the issue of spectrum sharing guidelines may be accessed here.

The Telecom Regulatory Authority of India (“TRAI”), in July 2014, recommended that sharing of spectrum in all bands (2G, 3G and 4G) should be allowed, subject to the condition that all operators have spectrum in the same band. The TRAI, however, specifically provided for a prohibition on leasing of spectrum. Additionally, the DoT plans to allow sharing of spectrum only between entities having 2G spectrum in the same service area and not between operators with spectrum in different service areas. Please refer or previous post on the recommendations issued by TRAI here.

DoT is in the process of finalisation of guidelines for inter-operator swapping. The said swapping is regardless of the type of allocation to ensure contiguity. The DoT has formulated a committee for the identification of issues concerning the industry, resolution of the issues and framing appropriate guidelines.

Additionally, the DoT is in process of reviewing the policy relating to licensing requirements for import of low powered wireless devices.

Spectrum Auctions from February 25

The Department of Telecommunications (“DoT”), on January 9, 2015 issued the ‘Notice Inviting Applications’ (“NIA”) notifying the schedule for the forthcoming spectrum auctions, subsequent to the approval granted by the Union Cabinet earlier this week. Our previous post on the cabinet approval can be accessed here. The said auctions are slated to begin from February 25, 2015.

The NIA, which is the only legally binding document for the auctions, outlines amongst other things details of the plan to sell spectrum to telecom operators, eligibility requirements and minimum earnest money which operators are to deposit to participate in the auctions.

This auction is pegged to be the largest ever telecom spectrum auction targeted to fetch at least INR 64,840 crore, in contrast INR 62,162 crore garnered by the Government from the last auction in February 2014. The upcoming auctions will be held for frequencies in four spectrum bands of 800 MHz, 900 MHz, 1800 MHz and 2100 MHz. The quantum of 2G spectrum to be auctioned (in the 800 MHz, 900 MHz and 1800 MHz bands) is estimated around 380.375 MHz in total.

Out of the estimated INR 64,840 crore, it is expected that around INR 16,000 crore would be paid in the current financial year as the first tranche. The budget for 2014 – 2015 had projected overall revenue from the telecom sector this financial year at INR 45,471 crore, 16.7 per cent higher than the interim budget estimate.

This auction is crucial for the existing players such as Vodafone, Reliance Communications and Idea whose licenses will compete their 20 year term in the 2015 – 2016 period.

However, the government though is yet to take a decision on the base price for 3G spectrum and the details regarding 3G spectrum would be issued later in the coming weeks. While the cabinet has approved the sale of 5 MHz each of 3G spectrum in the 2100 MHz band in 17 circles, the NIA is silent on the quantum and the reserve price. The move to auction 2,100-MHz spectrum brings some relief for telecom operators, who have been asking the government to auction additional spectrum for commercial use. Although, the telecom operators were hoping for around 20 MHz spectrum in the 2,100 MHz spectrum band.

The Telecom Regulatory Authority of India issued the recommendations for the base price for 3G spectrum in December 2014. Our earlier post on the recommendations can be accessed here. However, the Telecom Commission, earlier this week, had sent back the recommendations for TRAI’s reconsideration. Please refer our earlier post on this here.

Department of Telecom Commences Auction Process for 3G Spectrum

The Department of Telecommunications (“DoT”) in February 2010 initiated the process for the auction of spectrum in the bands of 2.1 GHz, which is the third generation (“3G”) spectrum and 2.3 GHz, the Broadband Wireless Access (“BWA”) spectrum. This move comes after the law ministry recently approved the auction process and the ‘Notice Inviting Applications’ for the said process.

 The DoT has issued the ‘Notice Inviting Applications’ for the auction of spectrum in these bands. The said notice can be accessed here. The auction would be carried on to allocate the 3G spectrum blocks and the BWA spectrum blocks.

The auction of 3G spectrum has been deferred twice in the past even after the date of announcements of the auction. However, it is expected that the present auction process would be conducted in the month of April 2010.

The 3G spectrum of 2.1 GHz paired would be auctioned in blocks of 5MHz and the BWA spectrum of 2.3GHz band unpaired will be auction in blocks of 20MHz. Additionally, the DoT has set-out the reserve price and the number of blocks to be auctioned for each service area in the ‘Notice Inviting Application’ for the benefit of the entities interested in the bidding process.

 Various media reports suggest that the Government expects INR 350 billion from the auction process.

 As per the Notice Inviting Applications, the DoT has prescribed the below process for the successful bidders at the post auction stage:-

1. In case of existing licensees upon receipt of successful bid amount, the DoT Wireless Planning Coordination (“WPC”) shall issue a Letter of Intent allocating the frequencies to the successful bidder. Additionally, necessary amendments to enable the use of frequency allocated by the WPC for provision of services under applicable license shall be made to the existing telecom license of the successful bidder, within 15 days of DoT receiving an application for the same.
2. In case of new entrants, i.e. those not having telecom licenses, upon receipt of the successful bid amount, the DoT WPC shall issue a Letter of Intent allocating the frequencies to the successful bidder. Additionally, upon the successful bidder obtaining a license, the DoT shall assign the specified spectrum.

 With 3G, the users would be able to access high-end data services, such as ultra-fast internet and video-conferencing, when the operators roll out the commercial 3G services.