NEW DELHI: The finance ministry wants all mobile spectrum held by existing cellphone companies to be auctioned when their permits expire in about two years. The suggestion, if accepted, could push up costs for older operators such as Bharti AirtelBSE -0.24 %, Vodafone and Idea.
At present, telcos offer 2G mobile services in two different spectrum bands - the 900 MHz band that is considered highly cost efficient and largely held by incumbent GSM mobile operators, and the 1800 MHz band, held by all later entrants, including dual-technology companies such as Reliance CommunicationsBSE -1.00 % and Tata TeleservicesBSE -1.76 %.
Under the existing policy, mobile phone companies can pay market rates and retain their 2G spectrum in the 1800 MHz band when their licences are renewed.
But the finance ministry has argued that allowing these firms to retain any part of their spectrum when their permits come up for renewal may result in "licences being treated as in perpetuity".
In a recent letter to the department of telecom, Department of Economic Affairs Secretary Arvind Mayaram said that both the 900 MHz and the 1800 MHz spectrum should be simultaneously sold through an auction so that operators can bid realistically.
Mayaram also rejected telcos' arguments where they sought continuity of permits as they had made huge investments for setting up their mobile networks.
Towers Will be in Use
"As regards to 'active' infrastructure, technology obsolescence in telecom sector is so high that the argument that the huge investments made in technology would last beyond 20 years is untenable," Mayaram said.
"Passive infrastructure like towers has already been hived off by several telecom companies and their entities. It would continue to be used by the new incumbents if the present incumbents fail to win the bid."
Forcing telcos to bid for spectrum when their permits expire could force them to stump up more cash, adding to their pressure on their already stretched balance sheets.
The finance ministry's suggestions, while being an important ingredient in the final policy, are not always accepted in full, especially if they are seen as adversely impacting the viability of the sector.
But these suggestions cannot also be brushed aside fully either, not least because the government has been on the defensive after being severely criticised for its previous policies in which spectrum was not auctioned but given away on a first-cum-first-served basis.
Finance Ministry wants to auction all mobile spectrum held by existing telecos - The Economic Times
At present, telcos offer 2G mobile services in two different spectrum bands - the 900 MHz band that is considered highly cost efficient and largely held by incumbent GSM mobile operators, and the 1800 MHz band, held by all later entrants, including dual-technology companies such as Reliance CommunicationsBSE -1.00 % and Tata TeleservicesBSE -1.76 %.
Under the existing policy, mobile phone companies can pay market rates and retain their 2G spectrum in the 1800 MHz band when their licences are renewed.
But the finance ministry has argued that allowing these firms to retain any part of their spectrum when their permits come up for renewal may result in "licences being treated as in perpetuity".
In a recent letter to the department of telecom, Department of Economic Affairs Secretary Arvind Mayaram said that both the 900 MHz and the 1800 MHz spectrum should be simultaneously sold through an auction so that operators can bid realistically.
Mayaram also rejected telcos' arguments where they sought continuity of permits as they had made huge investments for setting up their mobile networks.
Towers Will be in Use
"As regards to 'active' infrastructure, technology obsolescence in telecom sector is so high that the argument that the huge investments made in technology would last beyond 20 years is untenable," Mayaram said.
"Passive infrastructure like towers has already been hived off by several telecom companies and their entities. It would continue to be used by the new incumbents if the present incumbents fail to win the bid."
Forcing telcos to bid for spectrum when their permits expire could force them to stump up more cash, adding to their pressure on their already stretched balance sheets.
The finance ministry's suggestions, while being an important ingredient in the final policy, are not always accepted in full, especially if they are seen as adversely impacting the viability of the sector.
But these suggestions cannot also be brushed aside fully either, not least because the government has been on the defensive after being severely criticised for its previous policies in which spectrum was not auctioned but given away on a first-cum-first-served basis.
Finance Ministry wants to auction all mobile spectrum held by existing telecos - The Economic Times
