The department of telecommunications (DoT) on Tuesday notified guidelines relating to spectrum trading, which will help mobile operators buy and sell spectrum from one another. The measure will enable some weaker operators to smoothly exit business or reorganise their entire business model, while the stronger ones can increase their spectrum bank which will help them provide better services.
However, it remains to be seen whether trading in the 800 MHz band leads to some kind of dispute between the operators and the government leading to some kind of litigation. The reason is that the Cellular Operators Association of India (COAI) had written to the DoT highlighting that in only 10 circles the auction determined price of 800 MHz band should be taken as market prices.
It had said that in the balance 12 circles since the spectrum on offer was less than 5 MHz its right price was not discovered as that spectrum was of not much use then. But if the same is traded to create a larger block, its price would be much more. Since all the operators do not agree to this stand, there might be some disputes.
The spectrum trading notification said that all access spectrum bands earmarked for access services by the licensor (DoT) will be treated as tradable spectrum bands.
Spectrum purchased through an auction from May-June 2010 onwards can be traded, while for the one allocated administratively, operators need to pay the market determined price.
For the 800 MHz band, acquired in the auction held in March 2013, trading of spectrum will be permitted only if the differential of the latest auction price and the March 2013 auction price on pro-rata basis on the balance period of right to use the spectrum is paid. The auction of 800 MHz airwaves in 2013 was purchased by Sistema Shyam Teleservices (SSTL).
Under the guidelines notified, spectrum can be traded between two telecom companies with only outright transfer of right to use it from the seller to the buyer. Spectrum trading will not alter the original validity period of spectrum.
Trading will be permitted only on a pan-LSA (licensed service area) basis. The seller must clear all his dues prior to entering into any agreement for spectrum trading. Thereafter, dues recoverable up to the effective date of transfer will be the liability of buyer. Besides, all access spectrum bands earmarked for access services by the licensor will be treated as tradable bands.