New twist in the spectrum war

Trai chief Nripendra Misra's act of writing to the telecommunications ministry, saying it has distorted his recommendations on spectrum allotment, has given a fresh twist to the battle between the GSM-mobile industry and the ministry.

In his letter to the new telecom secretary, Mr Misra has asked that, according to the provisions of Section 11 of the Trai Act, the ministry refer the matter back to Trai.

Since all the fresh licences issued by the ministry, including the controversial GSM-mobile one to CDMA-mobile firm Reliance Communications, and the new subscriber-linked spectrum allocation policy (which raised the subscriber requirements for spectrum by two to three times) were made on the basis of Trai's August 28 recommendations, in a sense this opens up everything.

If the matter is referred back to Trai, and Mr Misra sticks to his original recommendations, the ministry will have a tough time ignoring them the second time round.

Given that the GSM-mobile phone firms have already appealed to the appellate body and the Delhi High Court, arguing impropriety in the government action, a letter from the Trai chief saying the same thing does complicate matters for the ministry.

It also raises a more serious issue since the Solicitor General has asserted before the appellate body that the Trai recommendations are the basis of government policy -- because Trai is now saying that this is not the case.

There are three main areas where the Trai recommendations have been distorted or ignored. One, for crossover technology firms (CDMA-mobile firms like Reliance, who will now be able to offer GSM-mobile services as well), Trai had recommended a higher annual spectrum usage fee -- this has been given the go-by.

Second, while Trai had dramatically hiked the number of subscribers required for fresh spectrum allocation, it had indicated that GSM firms could get up to a total of 15 MHz of spectrum, compared to the 10 MHz that most firms already have.

Yet, while notifying the new subscriber-linked norms, the ministry has only notified the roadmap till 7.5 MHz. Notifying a lower 7.5 MHz allows the ministry to show that there is excess spectrum to allot to new players; if, on the other hand, 15 MHz had been notified, the ministry would not have been able to allot fresh spectrum to as many players as it has now.
Third, in order to ensure that those getting new licences do not profit by simply selling them, Trai said stiff rollout obligations would have to be met first -- in a sense, this prevented selling the licence for three years. The government has neither accepted nor rejected this recommendation.

These are all substantive issues. But it is curious that Mr Misra did not protest earlier since it has been known for months that the ministry was cherry-picking from his recommendations.

Indeed, even though Mr Misra was well within his powers to make more detailed recommendations, he had left several areas open for the ministry to exercise its options. So, when it came to how the new licences were to be priced and whether an auction was the preferred route, Mr Misra suggested an auction was preferred but finally said the government could decide.

On the question of how the crossover firms were to be ranked in terms of priority vis-à-vis other applicants, Mr Misra left the ranking to the government. But all this is in the past. Now that Mr Misra has decided to go public, the ministry will find it difficult to ignore his views.