Recently India has seen a significant tussle between lobby groups over the government’s decision to allow companies (of certain net worth) to seek spectrum directly from the government for the purpose of deploying private networks. Though the rules for such assignment are not in place yet, the debate still continues unabated. Operators are worried, that in case such direct access to spectrum (outside auctions) is allowed, then it will disturb the level playing field, and will be tantamount to a “backdoor entry”. Also, it might even impact the intensity of the forthcoming 5G auctions, leading to a loss of revenue to the exchequer. Looking at the intensity of this debate, it appears that the operators are really concerned, and they don’t want any direct assignment of spectrum to entities outside the process of auction. Now, if auctioning of the spectrum is the only way out left of assigning spectrum, will India be able to deploy the latest and upcoming technologies, given the fact, that these technologies do not work in the manner the conventional technologies do? Will India be able to use its spectrum resources efficiently? If not, how should India modulate its rules, given the fact that we have a black legacy of the “2G Scam” — leading to the Supreme Court order for auction of the 2G spectrum in 2012 (given earlier in 2008 based on FCFS policy), as it was done for the allocation of 3G bands? Finding answers to these questions is the purpose of this note.
Why certain spectrum bands are always assigned through auction?
The reason: these bands are in high demand. Why? As it is cost-effective to offer services in these bands, due to availability of cheaper handsets. The affordability of these devices is enabled by the worldwide usage of such bands — driving economies of scale. Unless the handsets are affordable, the operators can’t reach the consumers, and hence without such access, it is useless for the operators to hold spectrum in such bands, as they will not be able to monetize it. Hence, the demand for these bands is high, and due to such demand, there are no effective means (other than auctions) for dolling them out, as otherwise, transparency will get compromised. In 2008, the 2G spectrum was in high demand, and therefore these spectrum bands should not have been assigned on a First Come First Basis (FCFS), and therefore, the 2012’s SC judgment should be seen in the light of this context. Auctioning such a spectrum band can also ensure that such resources are handed over to only serious players, who can use them most efficiently. Spectrum being a perishable resource, if wastage, can be detrimental to the economy and therefore not in the interest of the nation.
