TRAI says 'auction' is best alternative for spectrum allocation

New Delhi, Aug 1 (UNI) The telecom regulator TRAI has said that amongst all allocation procedures, auction was the best possible way to move forward to tackle the issue that has placed telecom operators in a continuing face-off with the government.

TRAI Chairman Nripendra Mishra in a letter to Communication Minister Azhimuthu Raja said that auction of all spectrum both 2G and 3G is the best way to go ahead in minimising the allocation problem that had plagued telecom operators, both CDMA and GSM over the year.

Mr Mishra said since spectrum is a scarce reource it should be appropriately priced to encourage its optimum utilisation and discourage non-serious players.

''Auction is the best approach. This is plain economics,'' Mr Misra said.

In another related development the group of ministers (GoM), headed by Defence Minister Pranab Mukherjee will be looking into the release of frequencies by the armed forces and would meet for the first time in mid-August and discuss at length the problem of spectrum vacation slated for this month only.

The meeting will be held by August 15. The Defence Ministry is expected to vacate some spectrum which would be used for both 2G and 3G services.

Currently GSM and CDMA operators are at loggerheads over the allocation procedure and pricing of 2G spectrum used currently by mobile players.

CDMA operators say that as per the unified access service licence (UASL), each GSM operator is entitled to only 6.25 MHz of 2G spectrum and CDMA operator up to 5 MHz which comes free of cost.

Tata Teleservices said if GSM operators were charged for the additional 2G spectrum allocated to them (beyond their contracted amounts), the Centre would earn in excess of Rs 1,700 crore in fees.

Contrary to the above, GSM operators said any plans to auction 2G spectrum is in conflict with not only the existing policy and licensing framework but also the contractual settlement between the government and the GSM industry.

According to a recent consultation paper by TRAI, the Department of Telecommunications (DoT) has allotted additional spectrum to many companies free of charge that would leave ex-chequer poorer by Rs 1,800 crore.

The paper shows that nearly all big telecom companies like Airtel, Hutch, Idea Cellular and BSNL and MTNL have been allocated extra spectrum than contracted in their licence terms.

A firm which has an Unified Access Services Licence (UASL) to offer telecom services across the country is entitled to 6.2 MHz of spectrum in each circle where it wants to launch its services.

The additional spectrum, over and above that contracted in the licence, has been given away free by DoT to companies and he total value of additional spectrum given away by DoT to all telecom players in the country, computed per MHz on the basis of licence fees paid totals to a revenue of Rs 1,800 crore.

UNI