The Telegraph
Friday , December 28 , 2012
Since 1st March, 1999
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Pitch for trade in spectrum

New Delhi, Dec. 27: The Plan Commission has advocated spectrum trading to improve efficiency, boost competition and provide incentives for innovation to mobile operators.

Spectrum trading will enable operators to sell surplus radio waves, or spectrum, to those who are finding it difficult to serve their growing customer base, leading to a more efficient use of the resource.

“Since spectrum is a scarce resource, priority will be on its vacation from lesser efficient uses and shift to more efficient use. Eventually move towards a regime that permits spectrum trading on a platform and create a market-driven mechanism towards its efficient use,” said the Planning Commission in the Twelfth Five-Year Plan (2012-17) report.

According to the report, the current mechanisms for allotment (such as auctions) do not give licence holders the flexibility to respond quickly to the changes in market demand and technology, resulting in the under-utilisation of spectrum and thereby creating an artificial scarcity.

“Therefore, some countries such as Australia, Canada, New Zealand, and some EU countries have permitted spectrum trading in the secondary market as an additional means of distribution,” the report stated.

Operators need higher quantities of spectrum to offer better voice and data services in India. However, the high price has proved a deterrent to many and had even discouraged bidders at the recent auctions held in November.

“Spectrum trading requires the implementation of a successful trading platform in the form of a secondary market requiring creation of an extensive automated infrastructure in the form of an exchange/online registry, which entails considerable regulatory costs,” the report said.

Since 2003, the Telecom Regulatory Authority of India has been pushing for trading with the department of telecom, which had been rejecting the idea. The DoT said, “If operators are permitted to trade in airwaves, they might shift from providing telecom services to only dealing in spectrum trade, creating greater shortage of the scarce resource.”

The move can also lead to hoarding and artificial pricing, the DoT added.

At present, service providers can share infrastructure and mobile network, including telecom towers, but not spectrum.