Mobile tower

The Department of Telecommunications’ guidelines for spectrum trading were approved by the Prime Minister earlier this week. The proposal for these guidelines was based on TRAI’s recommendations outlining issues relating to spectrum cap and maximum spectrum holding by telecom service providers.
We look at some of the highlights in the norms laid out for spectrum trading.
Initial considerations:
– Spectrum trading is only allowed between two service providers, but only the outright transfer of right of use of the spectrum will be permitted. Trading spectrum, or trading a block of spectrum will not change the original validity period of the spectrum.
– Any dues to be paid on the spectrum traded will need to be paid by the buyer, in case the seller hasn’t. The Government will reserve the right to recover dues, if any, from the buyer or seller, jointly or severally. If only a part of the spectrum is sold, both, the buyer and the seller, will be required to pay the remaining installments of payments, depending on the amount of spectrum held by each.
– The seller should have cleared its Spectrum Usage Charges (SUC) and its instalment of payment (in case seller had acquired the spectrum through auction and opted for deferred payment) by the effective date of trade.
– Frequency swapping or reconfiguration from within the assignments made to licensees will not be treated as spectrum trading. The NIA (Notice Inviting Applications) conditions will govern frequency swapping and reconfiguration.
– Buyer should be in compliance of the spectrum caps assigned from time to time. The spectrum acquired through trading will count towards this cap.
– If an issue related to the proposed spectrum to be traded is pending in the court, the seller will be required to ensure that its rights and liabilities are transferred to the buyer.
Guidelines on tradable frequencies:
– Trading of spectrum will only be permitted on a pan-LSA (Licensed Service Area) basis. Relevant provisions of NIA with respect to spectrum assignment in part of the LSA, which were applicable to seller before the spectrum trade, will apply to buyer after the spectrum trade. All access spectrum bands reserved for Access Services by the Licensor (Government) will be tradable.
– Spectrum trading is only allowed in spectrum that has been assigned in auctions held in year 2010 and later, or on which the Telecom Service Provider (TSP) has already paid the assigned market value (as decided by the Government from time to time).
– A TSP can sell the spectrum through trading only after two years from the date of its acquisition, either through auction or spectrum trading.
Regarding 800Mhz trading:
– As for the 800Mhz band acquired in 2013 auctions, spectrum trading will only be allowed if the differential of the latest auction price and the March 2013 auction price on pro-rata basis (on the balance period of right to use the spectrum) is paid.
– A buyer will be allowed to use the spectrum acquired in 800/1800 Mhz bands through trading to deploy any technology by combining it with their existing holdings in the same band after converting its entire existing spectrum holding into liberalized spectrum in that band as per the prevalent terms and conditions.
Fees and generic terms:
– A seller will not be allowed to trade in spectrum if it has been established that the seller had breached the terms and conditions of the licence and the Licensor has ordered for revocation/termination of its licence.
– Both the licensees have to inform the Government of the planned trade at least 45 days before undertaking the trade. Both also have to provide an undertaking that they are in compliance with all the terms and conditions of guidelines for spectrum trading and the licence conditions. In case of violation, the Government can take ‘appropriate action’, including annulling the trade agreement.
– A non-refundable transfer fee of one percent of the transaction amount or of the prescribed market price, whichever is higher, will be imposed on all trading transactions. The fee should be paid by the buyer to the Government, and will be a part of Adjusted Gross Revenue (AGR) for the purpose of levy of License fee and Spectrum Usage Charges (SUC).
– Existing rates of SUC will continue to apply on spectrum held by the buyer as “spectrum acquired through spectrum trading will be treated akin to spectrum acquired through auction.” The terms and conditions attached to the spectrum in the relevant NIA document and in other places will also continue to apply after the transfer of spectrum, unless specifically mentioned in the guidelines.
Also read:
TRAI to telcos: submit call drop plan of action; Airtel has top call drop complaints
Airtel in talks with BSNL for sharing spectrum to reduce call drops