India’s major operators are facing major setback due to the delay in the spectrum allocation they had won in February this year. Department of Telecommunication (DoT) is planning to offer 2,100 megahertz (MHz), 2300 MHz and 2500 MHz to the spectrum auction next year making it one of the biggest auctions in the telecom industry.
DoT is expected to send an official note to the Telecom Regulatory Authority of India (TRAI) suggesting a reserve price for the spectrum. It is also contemplating on reducing the validity period of the licenses from the current 20 years such that they can control the prices more frequently.
This sale could generate a whopping Rs. 2 Trillion for the state exchequer. In the hindsight, the revenue earned by the government in November 2012 and March 2013 auctions was less than what they expected.
Indian Government should learn a bit from the Dutch and the South African auctions which failed miserably due to the lack of interest in the unpaired frequencies and the spectrum caps. The spectrum caps were set to safeguard the interest of the new entrants which is a good thing but if we analyse the bigger picture, the chances of these spectrum remaining un-allocated increases. The consumers will end up bearing the brunt of increasing tariffs as it is natural for the Telecos to recover the investment on the spectrum.