Finmin wants telcos to pay for 2G spectrum

The finance ministry has opened a new front in the high-decibel war over 2G spectrum pricing. It is pushing for the 2G spectrum sale, advocating changes in the present spectrum allocation policy. Ministry sources said the 2G spectrum sale is the best possible solution to the current impasse on the issue.

Last week, the Department of Telecom (DoT) set up a committee on spectrum valuation and pricing. DoT sources said the committee has been given six weeks to submit its report and a final decision will be taken after that.

Finance ministry officials also share the view that paying a fixed fee for 2G spectrum, or asking operators to bid for spectrum through an auction system would force them to utilise this resource more efficiently.

“We need to incentivise efficiency in technology. There would be incentive to supply new technology or to improve existing ones (only when operators are asked to pay),” a finance ministry official.

Currently, operators pay an entry-level fee for 2G spectrum (that comes with the licence) while subsequent allotment of this resource is free (and linked to the subscriber base of the service provider), they pay 2-6% of their total revenues as spectrum fee. A fixed fee for additional 2G spectrum is a possible option as the requirement for 2G spectrum is far higher than the existing availability.

The war of words over spectrum pricing began with CDMA operators alleging that as per the unified access service licence (UASL), each GSM operator is entitled to only 6.25 MHz of 2G spectrum and each CDMA operator up to 5 MHz for free, adding that for any further allocation, operators must pay a fixed fee in addition to the revenue share.

GSM operators have strongly contested this and said licences awarded by the government do not cap the spectrum allocation at 6.25 MHz for GSM, and also said they are already paying an additional price for additional spectrum.