In a new twist to the ongoing spectrum saga, the Department of Telecommunications (DoT) is viewing auction of 2G spectrum resulting in market dominance by the operators who emerge as the winning bidders.
An internal note prepared by DoT states 2G services as telecom services for the common man may become "unaffordable" as a result of the auction.
"We must not loose sight of the fact that the participants in spectrum auction are commercial entities with an objective to generate profits.
The profits but naturally are going to come from the service revenues based on usage of their subscribers," said a highly-placed source.
According to the internal note, an auction of 2G airwaves may lead to a scenario where operators go overboard in their bids to get a larger share of spectrum; a cost that would ultimately be borne by the consumers.
An internal team of DoT is also believed to be working on various economic models of modalities of allocation of 2G spectrum. One of the options also includes giving start up spectrum as a part of the license and then an auction for additional spectrum. Exhaustive and in-depth study on revenues from spectrum based on tightening of spectrum norms based on TEC recommendations are also being conducted.
"TEC has come out with recommendations based on a host of technological factors. Revision of spectrum allocation subscriber base norms would result in more subscribers being accommodated in same amount of spectrum, thereby leading to higher revenue, thus higher license & spectrum fees from same quantum of spectrum," said the source.
The team is also studying the modalities on if a higher upfront spectrum fee would serve the objectives of National Telecom Policy or whether free growth of market would lead to higher revenue realizations for the government over a period of time.
"A high upfront cost model, that is the initial mobile license auction was a major failure, making the government to change the model to revenue share. The past experiences need to be considered while arriving at the most feasible model," the source added.
"Auction may be a good model for 3G services, which are premium in nature targeted at the top strata of mobile consumers. Affordability is one of the main factors that needs to be kept in sight for deciding for or against Auction of 2G spectrum as they effect the common man," the source stated. |
