Spectrum trading allowed with conditions, TRAI spectrum final recommendations

TRAI on Monday recommended spectrum trading with conditions. TelecomLead.com is sharing TRAI’s final recommendations on spectrum and full text.

Recommendation on spectrum trading is one of the main demands of telecom operators such as Bharti Airtel, Vodafone, Uninor, etc.

TRAI spectrum recommendations

TRAI on Monday said there should be no reservation of spectrum for the Renewal Licensees in 900 or 1800 MHz bands. The will be no priority should be accorded to these licensees in the bidding process and all bidders should be treated alike.

The telecom regulator said that, before the upcoming auction, the DoT should come out with a clear roadmap indicating the quantum of spectrum which will be available in future along with time-lines so that licensees whose licences are due for renewal in 2015/16 can take an informed decision about bidding for spectrum in the 1800 MHz band.

TRAI recommended that for auction of spectrum in 1800 MHz band, the block size should be of 2 x 200 KHz each and the existing licensee will have to bid for a minimum of 3 blocks. A new entrant will be required to bid for a minimum of 25 blocks of 2 x 200 KHz each.

TRAI recommends that for auction of spectrum in 900 MHz band, the block size should be 2×1 MHz with the condition that each bidder will have to bid for a minimum of 5 blocks.

According to TRAI, eligibility conditions prescribed in the recently held auctions (November 2012 and March 2013) should be retained for the upcoming auction.

All CMTS/UASL/UL(AS)/UL providing access service should have the same set of roll-out obligations and the DoT should amend the licence conditions to incorporate the same.

All villages having population of more than 5000 should be covered within 5 years of effective date of allocation of spectrum for access services and all villages having population of more than 2000 to be covered within 7 years of effective date of allocation of spectrum, TRAI said on Monday.

These amendments should be made effective from 1 April 2014. However, in case of TSPs holding CMTS/UAS licences prior to the year 2008, the time period for completing these additional roll-out obligations shall be two years/four years from the effective date, while for TSPs acquiring licence post-2008 the time period shall be five years/seven years.

The authority recommends that if a quashed licensee had already met its roll-out obligations in certain DHQs before its licence was quashed but it did not stop providing service in that LSA before re-acquiring spectrum in the auction, the roll out obligations already met by it before cancellation of its licence should be taken into account and the licensee should not be required to re-offer its that part of the network for the re-test.

Similarly, a renewal licensee should not be asked to re-offer its network for test of roll-out obligations already met before the renewal of its licence, if the licensee continues to provide access services.

TRAI said regarding compliance of roll-out obligations involving coverage of villages, self-certifications by the TSPs should be taken as compliance subject to the condition that 20 percent of the villages self-certified by the TSP will be sample test checked by the TERM cell. The sample test check by the TERM cell will be carried out within a time period of three months from the date of self-certification.

TRAI says that the frequency rearrangement in the same band, from within the assignments made to the licensees, should be permitted, amongst all licensees irrespective of whether the spectrum is liberalised or not.

Telecom operators should be allowed to convert their existing 1800 MHz spectrum into liberalised spectrum only for the balance validity period of the spectrum assignment on payment of the auction determined amount. The auction determined amount will be prorated for the balance validity period of spectrum assignment.

In case more than one set of market determined prices are available, the latest market determined prices available at the time when the TSP wants to liberalise its spectrum holding, should be applied.

If the market determined prices are more than one year old, then these prices have to be suitably adjusted to reflect prevailing market conditions. One way of determining the prevailing market rates could be by indexing the last auction prices at the rate of SBI PLR. Another way could be the market price as realised through spectrum trading.

The use of liberalised spectrum would be governed by the licence held by the TSP. The technology to be used by the licensee should be based on standards approved by ITU/TEC or any other International Standards Organization/bodies/ Industry. Also, if the use of spectrum is for any other technology than that already deployed in that spectrum band, its use has to be first ratified by the WPC. In such cases, the licensee shall provide details of the technology proposed to be deployed for operation of its services to WPC. It is also to be ensured by the TSP that deployment of any new technology should not cause harmful interference to already operating technologies either in the same band or in adjacent bands.

TRAI says the feasibility of adoption of E-GSM should be explored in a time-bound manner. The auction in the 800 MHz band should not be carried out now.

There is no need for determining a valuation or corresponding reserve price for 800 MHz spectrum at present.

TRAI said payment terms should be structured by the Government to address financing issues of the bidders in the proposed auction.

All spectrum allocated through auction should henceforth be charged at a flat rate. Spectrum acquired on through auction or trading or on which TSP has paid the prescribed market value to the Government should not be added to any existing spectrum holdings for determining the applicable slab rate.

This will also apply to spectrum allocated in the auctions held in November 2012 and March 2013.

Spectrum usage charge to be same for Reliance Jio Infocomm (4G operator), Airtel (GSM operator) and MTS (CDMA operator)

TRAI says SUC (spectrum usage charges) for all auctioned spectrum should be at a flat rate of 3 percent of AGR of wireless services. This will come into effect from 1 April 2014.

SUC rate for BWA spectrum should also be fixed at 3 percent where services are provided under CMTS/UASL/UL(AS)/UL.

The highest slab rate of SUC may be brought down to 5 percent of AGR with effect from 1 April, 2014. ( TRAI spectrum recommendations to aid Airtel, Vodafone, etc. )

TRAI spectrum guidlines

Spectrum trading

Spectrum trading should be permitted in the country. Initially, only outright transfer of spectrum should be permitted.

The Authority recommends that the eligibility conditions for spectrum trading and participation in spectrum auctions should be the same.

Only that spectrum should be allowed to be traded which has either been obtained through auction or on which the TSP has paid the prescribed market value to the Government.

This will also include the spectrum in 2100 MHz and 2300 MHz bands.

In case, the spectrum being traded by the telecom operators was assigned to it administratively, the prescribed market value shall be payable to the Government after adjusting the entry fee paid by the TSP for acquiring the spectrum (bundled with licence) prorated for the remaining validity of the spectrum. After the first trade, the spectrum shall be at par with the spectrum acquired through auction. Through trading, the validity period of spectrum will not change.

The Authority also recommends that the seller and the purchaser shall be required to inform the Licensor about the spectrum trade.

However, no permission shall be required from the Licensor/ Government. The information of the prospective trade is for the purpose of updating the spectrum register. The register should be updated within a maximum time of eight weeks. On expiry of the time limit, the spectrum trade will be treated as effective.

Trading transactions should be subject to the spectrum cap of 50 percent of the spectrum in a band and 25 percent of the total commercial spectrum assigned in an LSA.

In case a TSP wishes to sell its spectrum throughspectrum trading, after completion of the roll-out obligations, the TSP will be permitted to sell the access spectrum in parts, subject to the minimum quantum of spectrum permitted for trading.

However, in case the TSP has not fulfilled its roll-out obligations, then it will have to sell its entire holding of access spectrum and the roll-out obligations will also be transferred to the transferee.

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