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India’s telecoms minister proposes reform in spectrum licensing process

India’s telecommunications minister Kapil Sibal has outlined plans to disassociate spectrum from specific licences, instead letting mobile operators purchase spectrum via a “market-driven mechanism” – with auctions being a possibility.

“We are going to delink the licence from the spectrum in the new dispensation," stated Sibal, who went on to explain that in the future, licences would cover all areas of telecommunications, allowing holders to offer whichever services they choose.

Under the proposal, licences would apply to set amounts of spectrum, with operators paying extra for additional spectrum. Established operators such as Vodafone Essar and Bharti Airtel have already augmented their spectrum allowance to cope with increasing customer numbers, and would have an allowance of 6.2MHz before being required to pay for excess spectrum held.

Newer operators meanwhile would be awarded 4.4MHz of spectrum, and would have to pay for any excess beyond this. The Indian regulator TRAI will determine the exact method used for awarding spectrum; whether this will be auction-based remains to be seen.

The new approach could be seen as something of a reformation in the wake of the 2007 2G licensing scandal that has plagued India’s telecommunications sector, which was recently investigated by the former Supreme Court Judge Shivraj Patil.

Patil’s report accuses government officials not only of failing to take action to prevent inconsistencies during the licensing process, but also of breaking rules in order to permit these irregularities to happen. The investigation was ordered following the revelation by the government auditor that the scandal could have cost India up to US$40 billion in lost revenue.

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