Government Working on a Mechanism for Annual Spectrum Auctions

Sources have reported that the government has started working on having annual spectrum auctions, to ensure an adequate supply of spectrum to the telecom sector.

Center Working on Annual Spectrum Auctions

The move will represent a big reform in the telecom sector. So far, the telcos have had to wait years before the government held a spectrum auction. Also, the government will follow electricity trading norms to propose a mechanism for real-time spectrum trading. Discussions have taken place at the ministry level for liberalized spectrum, and also at PM's review of the sector. After the discussions, the ministry has sent a reference to TRAI for the same.

The government has felt the need for the same to ease the migration to the next generations of mobile networks. The sector needs a regular and adequate spectrum; an annual auction will help achieve that cause. A source said,  "A reference to TRAI, seeking its recommendations on issues involved in the auction of spectrum in different bands available for assignment to telecom companies, has been sent in September. We expect movement on this front over the coming months as Trai comes out with its set of recommendations and suggestions".

The move also comes over two months after the government first announced a sector relief package, announcing a string of reforms. The sector saw a variety of relief measures, along with many spectrum-related reforms under the same. Notably, the government had reduced taxes, increased the duration of spectrum holdings from 20 to 30 years in all future sales, reduced bank guarantees from 100% of the transaction value to 20%, and simplified spectrum surrender rules.

The government, however, has a longer timeline in mind for annual spectrum auctions. Since it wants to have the auction during a certain time of the year, the government wants to ensure availability. As such, right now, 2023-24 is being considered as a feasible timeline to start with annual auctions. Needless to say, with advancing technology, in particular the IoT segment, the telcos might need more spectrum than previous generations. As such, a regime for annual spectrum auctions will allow telcos to form plans to expand networks more proactively. Along with this, telcos won't have to buy all the spectrum they need at once. A large part of Airtel's and Vi's dues are towards spectrum payments; this move will help telcos financially as well.