2G spectrum scam: TRAI adamant, wants 74 permits cancelled

NEW DELHI: The telecom regulator has told the government that about 210 MHz, or units, of valuable 2G spectrum can be freed up if the telecom department accepts its recommendations for cancelling 74 mobile service licences for failure to roll out services.

The Telecom Regulatory Authority of India has also turned down the telecom department’s (DoT) demand that it reconsider its November 2010 recommendation suggesting that the government cancel 69 telecom licences of five operators, including joint ventures of Telenor ASA, Emirates Telecommunications Corp and Sistema JSFC.

“The authority has obtained legal opinion from two eminent jurists (former judges of the Supreme Court), which support this view,” Trai Secretary RK Arnold said in a communication to the DoT.

Trai’s stance will further increase the pressure on the government to act on the 74 licences. The regulator has reminded the government that airwaves thus freed up can be auctioned, which will bring in revenues for the exchequer.

“The authority would like to invite the attention of DoT…to its recommendations dated February 8, 2011, relating to auction of surplus spectrum, which would now be available in certain areas consequent upon cancellation of licences as recommended,” the Trai communication said.

Trai has said post cancellation, 2.5-15.5 units of spectrum would be freed up in each of the 22 telecom circles. The regulator’s projections are important as India has almost exhausted its 2G airwaves, the frequencies on which most voice services are currently offered. According to DoT, very little 2G spectrum is available in 10 circles.

For instance, Delhi has 3.6 units of airwaves left while Mumbai has 2.2 MHz. New entrants such as Tata Teleservices and Uninor (majority owned by Norway’s Telenor), which are yet to receive even start-up spectrum in several circles including Delhi, may have to keep waiting unless the government takes back 2G airwaves from some companies.

Additionally, about 50% of the country’s 14 telcos have only the basic start-up 2G spectrum in many key circles, leading to a possibility of many operators being unable to expand networks to cater to growing customer base.

For instance, in the Mumbai circle, leading operators such as Idea Cellular , Reliance Communications (GSM), Tata DoCoMo , Aircel and Uninor have only 4.4 MHz of airwaves, the minimum required to launch mobile services. While each of these mobile firms is awaiting at least 1.8 more units of 2G spectrum for their next phase of operations, the DoT study indicates a mere 2.2 units are available in total.

ET had reported last month that DoT had found that only 15 mobile permits may be considered for cancellation as against 74 suggested by Trai. The telecom department had arrived at this conclusion after studying the replies of mobile phone companies with regard to the show-cause notices issued to them.

Following this, DoT, in a detailed communication to Trai, had requested the regulator to revisit its method of assessing network rollout. It said the regulator had not considered the delays in getting airwaves and clearances from government departments while ascertaining whether companies had rolled out services as stipulated in their contracts.

Analysts said that with the regulator refusing to budge, the telecom department may find it tough to overrule Trai in the current scenario, where all actions of the communications ministry are viewed from the perspective of the 2G scam. Existing laws mandate mobile companies to provide commercial services in at least 10% of the district headquarters by the end of the first year.

The telecom ministry can impose a fine of Rs 5 lakh a week on mobile phone companies for every circle for the first 13 weeks of service delay. The penalty rises to Rs 10 lakh each for the next 13 weeks, and then to Rs 20 lakh for delays up to 26 weeks.

If service rollout does not happen within 52 weeks of obtaining a licence, the company’s permit can be cancelled and the spectrum that comes bundled can be taken back. The national auditor had criticised the ministry for not recovering Rs 679 crore as penalty or liquidated damages from six new operators for missing the network rollout deadlines.

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