Spectrum auction could go in vain, warns Indian finance ministry

Telecom Lead India: The
finance ministry is not too optimistic about the upcoming spectrum auction and
thinks that the spectrum sale process could fail.

The reason behind such anticipation can be found in the
telecom department’s proposal, which aims to make it mandatory for all
operators to match the auction-determined price for their existing 2G airwaves
for the remaining period of their licenses. 

The ministry has also asked for a clarification from DoT over its step to get
Cabinet approval to impose the one-time fee on a prospective basis, when the
issue is part of the presidential reference in the Supreme Court. 

The approval from the Cabinet will enable the government to
earn over Rs 100,000 crore from incumbents such as Bharti Airtel,
Vodafone, Reliance Communications and Tata Teleservices. 

A note by the economic affairs department of the finance
ministry read, “The proposal for prospective charging for the spectrum
being held by existing operators for the remaining period of their license at
the auction-discovered price is likely to suppress bids and might even result
in the failure for the auction in the worst case”.

Speaking on the auction process, Economic Affairs
Secretary R Gopalan said that the DoT’s move to proceed with ‘prospective
charging’ for airwaves held by existing operators clashes with its own decision
to await the outcome of the presidential reference.

The note said this ‘onetime fee’ was being imposed on all
existing players to creating a ‘level playing field’, and added the government
had the right to amend the terms and conditions of the licence anytime,
reported the Economics Times.

“The government could only modify the terms and conditions
of mobile permits in public interest, or in the interest of national security
or for violations of telegraph rules,” Gopalan clarifies.

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