India: Department Of Telecommunication Permits Spectrum Trading In India

Background

The Union Cabinet approved the proposal of Department of Telecommunication (DoT) on guidelines for spectrum trading arising from the recommendations of Telecom Regulatory Authority of India (TRAI).

The issue of spectrum trading has been considered by TRAI since 2010. However, since spectrum allocation (except 3G and BWA) was earlier made through an administrative process not based on market pricing, TRAI was not in the favour of permitting spectrum trading with the apprehension that it may result in unearned windfall gain for telecom service providers (TSP) and possible anti- competitive practices through consolidation/hoarding. Subsequently, DoT in late 2012- early 2013 decided that all existing TSPs would be required to pay a one-time charge (OTC) at a market determined price for their existing spectrum holdings (beyond 4.4 MHz/2.5 MHz for GSM/CDMA) for the remaining validity period. TRAI in its recommendation of September 2013 suggested that spectrum trading should be permitted subject to certain conditions. In October 2013, DoT conveyed its in-principle acceptance to TRAI's recommendation for permitting spectrum trading while referring back some issues to TRAI with a request for detailed guidelines on the subject. TRAI sent its final recommendations on "Working Guidelines for Spectrum Trading" on 27 April 2015. Based on these recommendations, the DoT submitted its proposal on spectrum trading, which was then approved by the Union Cabinet on 9 September 2015. Detailed Spectrum Trading Guidelines are expected soon from the DoT.

Highlights of Spectrum Trading

Meaning

Spectrum trading means transfer of right to use the spectrum. Spectrum leasing is not permitted which means only ownership of usage right is transferred from the seller to the buyer. Since spectrum is allocated for a fixed term, it has been clarified that the trading of spectrum will not alter the original validity period of the spectrum.

Area for Spectrum Trading

Spectrum trading is permitted only on a pan Licensed Service Area (LSA) basis. Spectrum cannot be traded for a part of the LSA. LSA is a service area for operation of a cellular mobile network e.g. Delhi, Mumbai, Gujarat, Punjab etc.

Permitted bands for Spectrum Trading

Spectrum trading can only take place for those spectrum bands which are earmarked for access services by DoT. Currently, spectrum in 800, 900, 1800, 2100, 2300 and 2500 MHz spectrum bands have been allocated for access services.

From the above mentioned spectrum bands, only the spectrum which has been assigned either through auction in the year 2010 or afterwards or on which the TSP has paid the prescribed market value to the Government, is permitted to be traded. However, in case of spectrum in 800 MHz band acquired by a TSP in the auction of March 2013, there is an additional requirement that the trading of spectrum will be permitted only if the differential between latest auction price and March 2013 auction price on pro-rata basis for the balance period of the right to use the spectrum is paid by the TSP.

Financial Implications

Any dues must be cleared by the seller TSP before it enters into an agreement for spectrum trading. All dues up to the effective date of transfer shall be the responsibility of the buyer. If there are any dues not known to the parties and which come to their knowledge after the effective date of trading, the Government in its discretion shall be entitled to recover such amount from the seller or buyer jointly or severally.

If only a part of the spectrum holding in a band is sold by a TSP, both the buyer and seller TSPs shall be held responsible for the payment of remaining instalments for the quantity of spectrum held by each of the TSPs subsequent to the trade. This will be applicable in case the seller TSP had acquired the spectrum through auction and opted for deferred payment.

A non-refundable transfer fees of one percent of the transaction amount or the market price of spectrum, whichever is higher, shall be imposed on all spectrum trade transactions and has to be paid by the buyer to the Government.

The amount received as a result of spectrum trading shall be a part of the revenue of the seller TSP and shall be subject to a license fee and spectrum usage charges as applicable to a TSP.

Time of Transfer

Spectrum can only be traded after two years from the date of its acquisition through auction or conversion of administratively assigned spectrum into tradeable spectrum. There could be additional requirements laid down in the bidding documents that the TSP will have to comply with depending on when the spectrum was acquired by the seller TSP.

However, merger route is another mechanism available to the TSPs for transfer of spectrum but it is subject to the extant merger and acquisition guidelines of DoT and has to undergo a court process.

Cap on Spectrum Holding

There shall be a cap on the total spectrum holding by a TSP. At present, the total spectrum held by a TSP in a LSA shall not exceed 25% of the total spectrum assigned for access services and cannot be more than 50% of the spectrum in a band and can vary from time to time.

Comments

The telecom industry is eagerly awaiting the rolling out of spectrum trading guidelines by DoT, which is expected by early October. Permission to trade in spectrum is definitely a welcome step as it provides an exit option to existing TSPs which had bought spectrum but have not been able to scale up their operations in India. At the same time, it helps established TSPs with congested network, to buy spectrum and improve quality of service without waiting for spectrum to be auctioned by the Government

However, there are concerns within the industry pertaining to the fact that spectrum trading is a costly affair since the government has permitted spectrum trading only in the liberalised spectrum segment and many TSPs which have administratively acquired spectrum would be required to shell out thousands of crores of rupees to liberalise the spectrum before trading. In addition to it, one percent of the transaction amount is to be paid as processing fees to the government by the buyer along with the license fee applicable on the amount received by the seller.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at legalalerts@khaitanco.com

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Nishith Desai Associates
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Nishith Desai Associates
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions