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Source-This post on Telecom Sector and Spectrum Auctions in India has been created based on the article “Why spectrum allocation, tech policy must not be a matter of courts” published in “The Indian Express” on 7 May 2024.
UPSC Syllabus-GS Paper-3– Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Context-The article discusses the 3G spectrum auction of 2010, held after the 2G spectrum allocation scandal of 2008. It highlights that the auction achieved two objectives: transparency in spectrum allocation and revenue generation for the government.
However, the author argues that the current auction format is detrimental to the sector’s growth and downstream competitiveness.
What method was used for spectrum allocation before 2010, and why was it changed?
Before 2010, spectrum allocation was done administratively, which suffered from issues like lack of transparency, favoritism, and scandals. The Supreme Court intervened and mandated spectrum auctions “for all time to come” to address these concerns, recognizing the systemic flaws in methods like the first-come-first-served (FCFS) for administrative allocation.
What are the issues with the current auction-based spectrum allocation?
1) Revenue Outcomes from Auctions-The revenue outcomes from auctions have been mixed, with high reserve prices leading to unsold spectrum and steep opportunity costs.
2) Spectrum Auction Success Rates– In only one out of the seven auctions held, all the spectrum available was sold. This happened in 2010, shortly after the 2G scam.
3) Limited role of policy maker– Deciding whether to use auctions or administrative allocation for spectrum assignment is a policy matter that should be left to the DoT and TRAI. They are the expert bodies responsible for this task. This is a tech policy which does not warrant courts intervention.
4) Transparency and Revenue Generation– Auctioning is not the only way to generate revenue because it can also come from other sources, like toll roads.
What is the importance of providing spectrum at a reasonable upfront fee?
1) Downstream Competitiveness– User industries’ competitiveness downstream depends a lot on strong connectivity. Offering spectrum to operators at a fair upfront cost can improve efficiency at the company level and enhance competitiveness.
2) Boosting Digital Infrastructure– Digital infrastructure is compared with toll roads that is, as well-built roads contribute to America’s wealth, in a similar way, quality digital infrastructure can also contribute to India’s prosperity.
Read more- Telecom Sector Reforms
What are some of the recent developments to address the challenges related to the current format of auctioning?
1) The Department of Telecommunications (DoT) has recently asked the Supreme Court to change its 2012 order. This would permit the administrative allocation of spectrum in specific situations where auctions aren’t technically feasible or desirable, such as for space and satellite applications.
2) The recently passed Telecom Act, 2023 has also specified that only limited and narrowly defined cases, including spectrum for BSNL, will be given on an administrative basis.
Conclusion-Thus, TRAI and DoT are the best authorities to handle telecom policies. Whether to hold auctions or not should be their decision, and they should be responsible and accountable for it.
Question for the practice
Highlight the problems with the current auction-based spectrum allocation?
