The Department of Telecommunications (DoT) is considering doing away with the present system of allotting 2G spectrum to existing telecom operators on a first-come first-serve basis. New operators will, however, be eligible for start-up 2G spectrum. Government sources said the department was considering auctioning of spectrum even for 2G services as the basis of allotting additional spectrum beyond start up. This way, it would also be able to determine its right market price, they said.

In the case of 3G services, the Telecom Regulatory Authority of India (TRAI) has already recommended that spectrum should be auctioned. DoT officials have written to the Prime Minister’s Office (PMO) to call a meeting between DoT secretary Siddharth Behura, finance secretary D Subba Rao and the TRAI chairman Nripendra Misra to discuss the issue of auctioning and pricing of spectrum.

On the issue of assigning spectrum on a first-come first-serve basis, DoT officials admit that it is fast, practical and inexpensive. “But not appropriate in today’s competitive environment. Increase in the number of competitors and demand for spectrum has led to the development of competitive approaches for its assignment,” they say.

Spectrum is a scarce resource. In most countries, it is auctioned to realise the best value and also to promote efficient use. However, in India, spectrum is allotted on a first-come first-serve basis. This has led to allegations of inefficient use. Instead of investing in state-of-the-art technologies to optimise their telecom networks, operators keep seeking additional spectrum from the DoT.

DoT officials have also noted that auctions provide an efficient, transparent and objective means of awarding licences to bidders who value them most highly. A proper pre-qualification process can ensure that successful bidders have the technical and financial capabilities to implement services quickly and efficiently.

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