November 21, 2024

The government has done well to get 15 MHz of spectrum in the 2100 MHz band released from the defence ministry for the department of telecommunications (DoT). This will give a huge boost to the commercial telecommunications in the country and would benefit a large number of telcos whose licenses are nearing expiry.

But there is a catch in the ensuing bidding coming up in February. If the government chooses to retain some of the released spectrum and puts up only, say, 10 MHz for bidding, it will result in panic bidding by companies whose licenses are about to expire. This would result in prices going up unnaturally. It would also result in the companies paying huge sums to the government just to stay in business. How then will they develop other infrastructure necessary for smooth operations will remain a big question mark.

There are two things that the government must do to ensure further rapid growth of telecommunications in the country. First, it should put up all the 15 MHz for competitive bidding. Second, it should keep the reserve price low. By low it does not mean that the companies should be given the spectrum at throwaway prices. But the government should think of maximizing its revenue throughout the licence period rather than charge a huge entry fee. It should strike a balance between the entry charge and yearly charge and should let the companies invest in infrastructure the amount they can save by getting the spectrum at a lower price.

The DoT can now go in for developing the telecommunications for the defence ministry in exchange for releasing of more spectrums. If the defence ministry is satisfied that it needs will be met, it will not be averse to releasing unused spectrum in 2100 Mhz and 1900 MHz bands. These can them be exploited for further telecom development.

It is difficult to imagine how the future scenario will develop, but it is good that this spectrum release has taken place. All that is needed now is a wise approach to the bidding process.