The inter-ministerial committee (IMC) set to finalise spectrum auction rules has sought the telecom commission's approval on a 'rank-based' system for allocating contiguous (continuous without a break) radiowaves to operators in the January auctions.
The IMC has asked the commission whether bidders may be given priority to allocate contiguous spectrum ahead of other successful bidders, based on certain ranking parameters. These parameters include price, the number of times the bidder has submitted the bid in a particular circle, total bid expenditure across all service areas, the previous highest bid, and/or a random index number.
Earlier, the IMC had decided to use 'time stamp' as a parameter for ranking bidders for allocating contiguous spectrum. However, in a note to the telecom commission it contended that “using this criteria would amount to hurrying up the bidders and is similar to extending the principle of first come, first serve”.
The IMC has also given the option of an electronic auction system and a two-stage auction, where a bidder will get priority, to get contiguous spectrum, based on the premium it pays. Most of the spectrum being put up for sale in the next round of auctions is not available in contiguous blocks of 5MHz, since these radiowaves were made available from the cancelled 122 licences issued to new 2G players in 2008. In only a few areas, spectrum is continuous.
While non-contiguous spectrum works for offering voice services, higher technologies need the airwaves to be available without a break. The need for contiguous spectrum becomes even more important since the spectrum being sold is liberalised, which would essentially allow the winner to use it for any technology – 2G, 3G or 4G.
Under the electronic auction system, the frequency identification stage will be a random identification of frequencies performed automatically by the Electronic Auction System.
However, in an October meeting of the IMC, the option of holding a two-stage auction, wherein the first stage would be for price discovery and the second stage for getting contiguous spectrum with a premium, was discussed and discarded by the members.
The IMC members had decided that charging a premium for contiguous spectrum “would cause problems in future, in view of the likely government policies for spectrum trading/swapping”.
The committee has also asked the telecom commission to decide whether “successful bidders, having won a minimum of 5Mhz of spectrum, but being allowed non-contiguous spectrum, are to be given the option to withdraw their bids”.
For the auctions held in November 2012 and March 2013, spectrum was sold in slots of 1.25MHz with new operators needing a minimum of 5MHz to start operations. In September, the Telecom Regulatory Authority of India had proposed that the government sell spectrum in slots of 200KHz in order to significantly improve efficiency.
The government plans to hold spectrum auctions in the 900MHz and 1800MHz bands from 21 January onwards. The finance ministry expects that if successful, the sale could earn the exchequer a minimum of Rs 24,000 crore. DoT is also looking into the possibility of including 3G spectrum in this auction.