TRAI, DoT lock horns on 3G policy

NEW DELHI: TRAI’s recent letter to DoT, highlighting shortcomings in the government 3G policy, has kicked up differences between the telecom regulator and DoT.

TRAI, in its letter, has highlighted six shortcomings in the 3G auction guidelines that were announced recently. The most significant one that can impact exchequer revenue relates to the need for an “amended’ ’ unified access service licence (UASL), which needs to be acquired by every successful new entrant in the 3G space.

TRAI, in its letter to DoT, concludes that a reading of the 3G guidelines “implies that in case a non-licencee becomes successful bidder, he will be given a new (modified) UASL without the provision of 2G spectrum (spectrum in the 800, 900 & 1800mhz) at an entry fee equal to the entry fee of UAS licence’’ .

While announcing the 3G guidelines, telecom minister A Raja had confirmed that universal licences for new 3G entrants—costing Rs 1,651 crore— will come without 2G spectrum. Potential bidders have also complained that this is “unjustifiable and discriminatory’’ . Now, in contrast to TRAI and Raja’s conclusions, a senior DoT official told TOI that “new 3G entrants will, by virtue of their universal licence , be eligible for 4.4 MHz of spectrum as per the law of the land and can also join the 2G queue’’ .

This fresh twist is set to spark more confusion among potential bidders.

TRAI has thrown another spanner by informing DoT that it needs to receive recommendations from the regulator if any amendment of the licence agreement is proposed. “As this would require the terms and conditions of this new licence , including the annual licence fee, the authority would like to draw the attention of DoT to section 11 of the TRAI Act wherein recommendations of TRAI are necessary,’’ the regulator wrote.

DoT will find this letter tough to ignore, considering TRAI’s principled and legally valid stance on the matter. Equally, TRAI is obliged to engage in a public consultation process. All this could take months. Meanwhile, all this confusion could help new entrants make a killing. A shareholder in a pan-India 2G firm that received a letter of intent (LoI) on January 10 for 2G spectrum told TOI that 3G entrants will be better off while striking deals with new entrants before participating in auctions. The firm, which paid Rs 1,651 crore for 4.4mhz spectrum, has term sheets doing the rounds boasting of an enterprise value of Rs 6,000 crore, without even spectrum in hand.

“Even if new 3G entrants join the 2G spectrum queue, everyone knows there is no spectrum to give, so why should they pay the government Rs 1,651 crore for just a licence. They would be wiser to buy into a company like us which has assured spectrum,’’ he told TOI.

Source : Economic Times