Delink licence from spectrum, auction 3G: Eco Survey

New Delhi: Suggesting delinking of spectrum from telecom licences, the Economic Survey for the year 2008-09 has suggested auctioning radio frequencies for the forthcoming 3G mobile services.

"Auction 3G spectrum," the Survey, tabled in Parliament, said, adding that "the auctioned spectrum must be freely tradable, with capital gains on spectrum to be fixed under the Income Tax Act."

The Government is eyeing huge revenue from the auction of 3G spectrum and is likely to fix a reserve price of Rs 4,040 crore for pan-Indian spectrum. Going by this, the Government will get nearly Rs 30,000 crore from auctioning spectrum.

Giving suggestions on auction price, the Survey, which is a pointer to future economic policies, said the price can be fixed or be charged per unit of bandwidth per annum, or a combination of two.

Though, the Government had announced e-auction for 3G and BWA spectrum in August 2008, the process has not taken off as the Government is yet to decide the reserve price for the radio waves.

The survey has also suggested disaggregating spectrum from telecom licence.

At present, a pan-Indian telecom licence comes bundled with spectrum. For GSM services, the licence has 4.4 MHz of start-up spectrum while a CDMA operator gets 2.2 MHz of air waves.

The Survey also suggested that spectrum should be "traded" freely among telcos having licences.

"Spectrum should be freely tradable among the companies having a telecom licence," the Survey said in its policy prescription. At present, the policy structure in the country does not support trading airwaves.

It further added that a telecom licence should have a nominal regulatory charge and be based on the capability to provide sustained services.

The telecom sector, with about 414 million subscribers in February 2009 and adding over 14 million subscribers in 2008-09, has seen an inflow of Rs 11,595.48 crore of foreign direct investment in 2008.

The Government has also set a target to reach 600 million subscribers by the end of the Eleventh Five-Year plan ending 2012.

With focus on rural telephony, it has also proposed to achieve a rural teledensity of 25 per cent through 200 million rural connections by 2011-12.

Rural teledensity reached 13.81 per cent in January 2009, while urban teledensity shot up to 83.66 per cent.