After a controversial few quarters, owing to the 2G spectrum scam, the Niira Radia tapes, and the resignation of Telecom Minister A. Raja, the Indian Government has said that it intends to let forces determine the cost of the spectrum, and will consider the adoption of an auction based process for allocation and pricing of spectrum beyond the assigned 6.2 Mhz. In a statement, Telecom Minister Kapil Sibal has said that the Indian Government will seek a plan of action from the Telecom regulator TRAI. Here’s what you need to know from the statement, and its aftermath:

– The Government wants to unbundle spectrum from the Telecom license, and auction spectrum. Service providers will get a Unified Service Access licence, allowing them to provide any of telecom services, but they’ll have to obtain spectrum for that particular service through a market driven auction process. Earlier, during the controversial 2008 allocation, licensees were given spectrum along with the license, as start-up and contracted spectrum. 6.2Mhz of spectrum was alloted to each service provider, but quite a few of them so far only have got the basic start-up spectrum of 4.4 Mhz and are awaiting the rest of the 1.8Mhz as contracted spectrum. For new licences there will be no start-up or contracted spectrum bundled with the licence.

– Allocation of remaining spectrum only after rollout obligations met: New operators who had been alloted licences in 2008 have been fined for delays in network rollout and been sent show-cause notices asking why their licences should not be cancelled. To these erring players, the additional 1.8Mhz spectrum will be alloted after completion of the exercise and spectrum assigned only at a price determined under the new policy.

– All new licencees will be charged for spectrum beyond 4.4 Mhz although they were promised a  spectrum of 6.2Mhz at the time of licence allotment.

In a statement, Tata Teleservices Executive President, Deepak Gulati said that the 6.2Mhz spectrum should be alloted to all operators, in a manner that the ones who are still awaiting their start-up spectrum be alloted that first, and that those who have excess spectrum, should be charged for the same, retrospectively. The company has still not received start-up spectrum for key circles like Delhi.

Nikhil adds: Is a level playing field necessarily fair play? Our take is that the subscriber linked allocation of spectrum was the best way to approach this – if a telecom operator is providing services which attract more users, allocation of spectrum should be made to him – this ensures that the consumer experience doesn’t suffer, and rewards service providers who provide better service.

That said, they should made to pay for buying excess spectrum, and perhaps allowing trading in spectrum means that the demand and supply situations are taken into account, even for telecom operators who are hoarding spectrum. If a particular telco is unable to acquire customers in a particular circle, why not allow him to rent it out to the operator that is doing well? The end goal should be to serve consumer interest, and ensure that spectrum available is being efficiently utilized.