Digital

Telecom Department Mulls Allocating Valuable V-Band Spectrum Without Auctions

The move, which is a gross violation of the Supreme Court order on 2G and auctioning spectrum, could result in potential revenue loss of upto Rs 4 lakh crore.

It is difficult to quantify the size of potential revenue loss for the government if V-band spectrum is given away for free. Credit: Reuters

It is difficult to quantify the size of potential revenue loss for the government if V-band spectrum is given away for free. Credit: Reuters

New Delhi: In what appears to be a gross violation of the Supreme Court judgement on the 2G spectrum case, the Department of Telecommunications (DoT) is considering allotting 7000 MHz of V-band spectrum without conducting auctions.

If the department succeeds in allotting spectrum on first-come-first-served basis (FCFS) without auction, it would be running against the logic laid down by the 2G judgement, as V-band airwaves have very high potential for commercial applications.

The Supreme Court had clearly laid down that the government shall allocate spectrum to private players only through an auction process.

It is difficult to quantify the size of potential revenue loss for the government if V-band spectrum is given away for free. This is because the market value of spectrum, in most cases, can be realised only through an auction process. However, if we go by the methodology adopted by the former CAG Vinod Rai under whom the national auditor had calculated notional loss, the size of potential revenue loss could be at least Rs 4,77,225 crore.

In October 2016, the government sold 965 MHz of spectrum in various bands ranging from 800 MHz to 2500 MHz for Rs 65,789 crore. The price achieved through auction for 1 MHz of spectrum was Rs 68 crore. In the V-band, 7000 MHz of spectrum is available. Hence, loss to the exchequer could be to the tune of Rs 4,77,225 crore.


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Sources said that a meeting in this regard was held in the DoT recently. Officials of the telecom regulatory authority of India (TRAI) were also invited to participate.

In a letter to the DoT on November 9, Rajan S. Mathews, the director general of Cellular Operators Association of India (COAI) wrote: “Since the V-band has potential to be used as access spectrum and as per the decision of the government to auction all Spectrum, it is expected that the government should soon auction these bands. It is also pertinent to note that if this spectrum is de-licenced then there would be no motivation for players to spend huge amount in any auction.”

Interestingly, American technology companies like Facebook are interested in working with V-band spectrum to provide broadband and Wi-Fi services. In India, Broadband India Forum, a lobbying group that has companies like Facebook, Google and Microsoft as its members, is advocating that the spectrum should be de-licenced, which effectively means that it should be allocated without auction on FCFS basis.

“In the 2G judgement, the Supreme Court has made it mandatory that spectrum, which is a scarce natural resource, would be allocated by the government only through a transparent auction process. This would achieve both fair competition and maximising revenue for the state,” said Pranav Sachdeva who was a lawyer for the petitioner Centre for Public Interest Litigation in the 2G case and in the subsequent presidential reference.

“This was affirmed by a Constitution bench judgement related to allocation of natural resources in which the Constitution bench said that as far as Spectrum is concerned, it can be allotted only by auction.”

In its February 2, 2012 judgement in the 2G case (Centre for Public Interest Litigation, (2012) 3 SCC 1) the Supreme Court verdict says:

96.  In our view, a duly publicised auction conducted fairly and impartially is perhaps the best method for discharging this burden and the methods like first come- first-served when used for alienation of natural resources/public property are likely to be misused by unscrupulous people who are only interested in garnering maximum financial benefit and have no respect for the constitutional ethos and values. In other words, while transferring or alienating the natural resources, the State is duty-bound to adopt the method of auction by giving wide publicity so that all eligible persons can participate in the process.

The constitution bench affirmed this order when the government sought presidential reference. Presidential order by the constitution bench clearly says:

83. …. we are convinced that the observations in Paras 94 to 96 could not apply beyond the specific case of spectrum, which according to the law declared in the 2G Case, is to be alienated only by auction and no other method.

Former TRAI member DPS Seth told The Wire that it was important that spectrum should be allotted only through auction. “Supreme Court is very clear that spectrum should be allotted only through auction. Delicensing it doesn’t seem to be the correct approach,” said Seth.

In 2015, when the DoT sought TRAI’s recommendations on whether it could allot V-band spectrum on FCFS basis by de-licencing it, the regulator didn’t give its opinion. It simply stated: “From letter dated 08.06.2015 it emerges that the main issue is that in view of the judgement dated 02.02.2012, whether spectrum can be allotted by a means other than auction… It is for DoT to take a policy decision as to whether it is legally tenable to allocate spectrum by any other mechanism (viz. administrative) than auction in consultation with the Ministry of Law”.

The term ‘V-band’ is used to categorise radio waves in 57 to 64 GHz. In recent times, it has become useful to the explosion of data services. It is primarily used for providing access services at data transfer speed of up to 7 Gbps but is also used as backhaul spectrum.

Manoj Gairola is the editor of TelecomTiger.

  • ashok759

    More than auction or FCFS, although the former is clearly more aligned to a level playing field, what is important to ensure is that the government receives fair value for a scarce public resource. In the 2 G matter, licences alloted for 1,650 crores were actually worth about 10,000 crores each, as became evident from the premium foreign partners like Etisalat paid for joining an allottee. 2. The essence of the apex court judgment on disposal of natural resources is that there should be fair price discovery. If the spectrum is worth about 68 crores per megahertz, as derived from recent auctions, and if it is abundantly available, the government could take a conscious decision to offer it at close to this price to whoever applies for it. However, if it falls short, that would be an indication that it is being under priced. 3. While gifting away scarce resources, as with coal blocks, or giving them at unnaturally low prices, as with 2 G spectrum, is now no longer permissible, after the apex court judgment, the government, as a responsible stakeholder, should not create an artificial scarcity, inducing telecom firms to bid aggressively. They have done so in the last few years, leaving the industry over leveraged, low on profitability and staring at a precarious future. That is also not in the public interest.