Supreme Court extends 2G auction deadline to August 31: Top 10 facts

The Supreme Court has allowed the government to complete the 2G spectrum auction process by August 31, 2012. The court had earlier asked the government to complete the process by 2 June 2012. Meanwhile, the Indian Telecom industry has slammed recommendations of the Telecom Regulatory Authority of India (TRAI) on the auction of 2G spectrum calling them ‘regressive'. They fear that the sharp rise in the reserve price could mean a sharp increase in tariff for mobile users by services providers and a significant dent on the investor confidence in the telecom sector.

Here are latest developments:

• The Supreme Court has extended the deadline given to the government to complete the 2G spectrum auction. The process was earlier to be completed by 2 June 2012. The government earlier sought 400 days to complete the process. Companies like Uninor and Sistema who have lost their licences due to the verdict can operate till 7 September 2012. TRAI in its latest recommendations has proposed reserve pricing per MHz (the unit for measuring mobile signal frequency) for 1800 MHz at Rs 3,622 crore. The auction would be in a slot of 1.25 MHz. This translates into a reserve price of over Rs 18,100 crore for a block of 5 Mhz.

• The Cellular Operators Association of India (COAI) and the Association of Unified Telecom Service Providers of India (AUSPI) have vehemently expressed their concern and disapproval of these recommendations and termed them as being arbitrary, regressive and inconsistent. “The industry was looking forward to reasonable spectrum reserve price recommendations from TRAI in the light of the government's own articulated policy directions on affordability and rural penetration,” associations said in a statement.

Also read: Telecom shares fall on TRAI recommendations

• Mobile operators fear that the policy would further hurt the ability of the country to be at par with other developing and developed nations where access to communication and information via the Mobile broadband route has been regarded as the foremost parameter for the socio-economic growth an index of national competitive advantage. “Moreover, it will also affect the investors' already shaken sentiments as it will prove to be an impediment for operators to invest and expand services. We hope that the Government will look into this aspect and revisit the entire process,” the statement adds.

• Vodafone India expressed a deep concern over TRAI recommendations. “We believe that several of these recommendations are retrograde and if accepted, will do irreparable harm to the industry. It will hamper the ability to connect the unconnected and goes against the objectives of National Telecom Policy of ensuring improved rural tele-density and right to broadband,”Vodafone said in a statement. Uninor in a statement said that it seemed obvious that some of these recommendations would create severe negative impact on the entire industry. “It is up to the political leadership of India to now ensure that the gains of the past few years of affordable phone calls for India's people are not undone," the statement said.

• According to consulting firm, KPMG, TRAI recommendations on the hike in reserve prices appear significantly on the higher side. “This is likely to be a strain on the resources of the bidders, especially with a highly competitive market landscape. While proposed auction is in blocks of 1.25MHz, this is itself will be inadequate to commence or continue operations. “Higher reserve price and resultant auction price is likely to lead to an increase in tariffs by service providers,” the firm said in a statement.

• According to the recommendations, spectrum would not be bundled with licenses in future. This would thus enable market value realization of a scarce natural resource. Liberalization and re-farming of spectrum and its auctioning to both incumbent and new operators would lead to a level playing field between service providers in the telecom sector space, according to KPMG.

• These base prices are for a national licence. Earlier, India was divided into a complex web of telecom circles. TRAI has also said that 900 MHz spectrum should be replaced with 1800 MHz. It also said that 2.4 MHz of excess spectrum will be taken from MTNL. Spectrum will be offered in blocks of 1.25 MHz, and at least 5 MHz will be offered in the auctions.

• The Supreme Court had on 2 February 2012 cancelled 122 wireless mobile service licences held by variious telecom operators because of the manner of their allotment and directed the government to hold auctions to distribute the 2G licences.

• TRAI chairman J.S. Sarma said on Monday that the new pricing was higher than the existing one, but that the “pricing mechanism is justified”. He added that “spectrum charges per minute are quite low”. The technology charges for 1800 MHz are going up steeply, he said, and that the refarming of the 900 MHz is “in the industry's interest”.

• TRAI also recommends that spectrum to be assigned through auction shall be liberalized. This means that spectrum in any band can be used for deploying any services in any technology. TRAI has said that auction of spectrum shall be conducted using Simultaneous Multiple Round Auction (SMRA) format. As regards the auction of spectrum in 1800 MHz and 800 MHz bands to be conducted immediately following these recommendations, TRAI has recommended that it should be held in single