This is Part 4 of a 7 part series on Technology, Media and Telecommunications Review. It was authored by AnantLaw and published by Law Business Research Limited in December 2022.
Part 4: Spectrum Policy
4.1 Development
The frequency and spectrum management in India is within the control of the WPC under the Ministry of Communications. It is responsible for licensing regulation relating to spectrum in India. The SACFA is a committee whose operation is to recommend on major frequency allocations issues, formulating frequency action plans, recommending on issues referred to it by wireless users, and providing clearance of wireless installations, among others.
In India, the National Digital Communication Policy of 2018 recognised that ‘spectrum’ is a key natural resource of a country and therefore must be used only for public benefit while also achieving India’s socio-economic goals. Therefore, it lists numerous strategies that ensure transparency in allocation of spectrum while also optimising its availability. In a similar fashion, TRAI also makes recommendations through its consultation paper on spectrum allocation, usage and pricing.
Initially, the allocation of spectrum was done through bundling up a band of spectrum along with a franchise licence for a service. All additional assignments were at the discretion of the DoT and the allotment was on a case-by-case basis. The first ever spectrum licence in India was auctioned in 1994, when TRAI made recommendations on the same. To simplify the process, the government came up with a scheme in which the Indian territory was divided into 23 telecom circles. To be eligible to participate in the auction, a bidder must satisfy conditions provided by the government.
However, there have been uncountable controversies on the allocation of spectrum. To quote some examples, there is the 2G spectrum scam of 2008, wherein the Telecom minister issued the 2G spectrum licence in the 2001 rates, as opposed to 2008 rates, causing the government a loss of approximately 1,760 billion rupees.
A similar case was when four former Indian Space Research Organisation scientists were blacklisted in the Antrix-Devas deal, wherein the S-band spectrum, to be utilised for satellite phones was sold at a lower price, without informing the space commission and remained unutilised for years. In 2009, the S-band, with the frequency of 2.3GHz was forcefully sold to BSNL and MTNL, which was surrendered by them, causing a loss of approximately 80 billion rupees. It was challenged in the Supreme Court, wherein the entire auction was held to be arbitrary, unconstitutional and at the expense of taxpayers’ money.
As a result, TRAI introduced Guidelines on Trading of Access Spectrum by Access Service Providers which provided for allowing the licensees to trade their exclusively assigned spectrum usage rights to any unlicensed parties that qualify the preconditions, with an aim to efficiently use the spectrum.
Currently, deployment of Fifth Generation (5G) mobile communication technology is setting a stage for next generation spectrum management. These new arrangements are an effective way to satisfy upcoming connectivity needs. The new regimes aim at facilitating access to additional spectrum, which would be necessary to meet the mobile data traffic.
On 30 November 2021, TRAI released a consultation paper on Auction of Spectrum for IMT/5G. On 11 April 2022, it published a recommendation on Auction of Spectrum for IMT/5G.
In June 2022, the DoT issued a notice inviting applications for auction of 5G spectrum. In August 2022, after almost 40 rounds in over seven days, the spectrum was sold with the spend of approximately 1,501.73 billion rupees. As reported, this auction has turned out to be the biggest auction. The top bidder, Reliance Jio has invested the maximum earnest amount of about 880.78 billion rupees followed by Bharti Airtel with 430.84 billion rupees.
4.2 Flexible spectrum use
For commercial mobile services, radio spectrum is scarce and countries around the world have realised it. They recognise the necessity of utilising it efficiently and therefore, their regulatory and policy approach towards spectrum management is quite flexible. Scientists have been focusing on development of technology which can make standardisation activities for large-scale deployment possible.
In India, TRAI published its Recommendations on Allotment of Spectrum to Indian Railways for Public Safety and Security Services in October 2019. The recommendations analysed the proposal of installation of a high-speed long-term communication corridor for monitoring services, passenger system displays and live feed of video surveillance of coached trains.
Moreover, the Authority also recommended that the spectrum must be assigned on an administrative basis, not to be used for commercial services, like WiFi on-board and for captive use only. Further, the charges for spectrum must be levied on a formula basis, as prescribed by the DoT for license fee and royalty for captive use.
On 9 June 2021, the MIB announced that the government allocated 5MHz spectrum in a 700MHz band for Indian Railways and 250 billion rupees would be spent in the next five years for signal modernisation and 5G spectrum implementation in Indian Railways.
4.3 Broadband and next-generation services spectrum use
Next-generation broadband networks and their deployment is one of the key issues for discussion in the telecom sector, as they drive economies of countries. These next-generation networks raise the standard of living, boost the internet of things, deliver advances in sectors like healthcare, education, e-commerce, public security and create employment opportunities. The small-cell, 5G and long-term evolution (LTE) are also a crucial information and communication technology infrastructure, as radio technologies are evolving, resulting in placing new demands on a country’s need to set a uniform deployment in all circles.
In India, the 5G spectrum auction was one of the biggest steps towards upgrading the telecom sector and a way to catch up with China, South Korea and the United States. The auction earned a revenue to the government by realising only 35 per cent of the reserved price, which was more than was expected of it. It is an accepted practice that auctions generate revenues utilised for social welfare by the government. Therefore, this 5G auction is foreseen to have the potential to create a new age for business, generate revenue to enterprises, while also creating employment opportunities in the country.
4.4 Spectrum auction and fees
Typically, there are two models of spectrum auction adopted by different countries: simultaneous multiple round auction (SMRA) and combined clock auction (CCA). India has adopted a hybrid approach, which is SMRA with clock auction. In other words, the auction has two stages – a generic stage, wherein every slot is auctioned and treated as equivalent, without frequency location information, and then the frequency identification stage.
In a spectrum licence, typically, there are three fees – entry fees, annual licence fees and allocation fees.61 During the auction, the DoT sets a reserve price, which is the minimum price at which the spectrum can be licensed.
However, the government scrapped the spectrum usage charges (SUC) for spectrums acquired through auctions held after 15 September 2021, which typically was approximately 3 per cent of the adjusted gross revenue of the operators, and the decision was taken considering the most awaited demand for the 5G auction. This floor price was set in 2006 with an aim to safeguard the government revenues and lowered to 3 per cent to provide encouragement to the companies to participate in the auction.
The adjusted gross revenue (AGR) dues created a burden on these telecom companies, wherein, even after providing a 4-year moratorium to the operators, the telecom relief package seemed burdensome to the companies. Therefore, the government also decided to remove the SUCs on airwaves acquired in future auctions. Moreover, the requirement to submit a financial bank guarantee, which was equivalent to one annual instalment is also removed by the government.
Moreover, the government has also set a roll to provide opportunities to enterprises for building captive private 5G networks and issued guidelines for the same, allowing companies to apply for a renewable licence for 10 years against a non-refundable fee of 50,000 rupees from the DoT. The Guidelines also provides that the entities applying for the spectrum must have a minimum net worth of 1 billion rupees and must be an occupant of the geographical area on which it intends to establish the captive network.
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