Legal eagles against spectrum move

NEW DELHI: Legal luminaries are opposed to the idea of government auctioning spectrum for 2G telecom services.

Senior advocate Fali Nariman is believed to have told the Cellular Operators Association of India (COAI) that “it would be impermissible in law for the Department of Telecommunications (DoT) to offer fresh spectrum for 2G services to mobile operators only through auction in place of the current subscriber-linked allocation/revenue-share basis of spectrum.”

The COAI, which represents the global systems for mobile communications (GSM) operators, has sought legal opinion on the issue.

According to Nariman, “It is not now open in law for DoT to change from revenue share basis/subscriber-linked allocation to an allocation (of spectrum) only by auction even if this would be more transparent or would earn the government more revenue…”

Such a changeover would be “arbitrary, discriminatory and violative of Article 14 of the Constitution,” he argued.

Another senior advocate Anil B Divan pointed out that “any proposed auction of 2G spectrum will clearly be in conflict with not only the existing policy and licensing framework but the contractual rights arising from the settlement between the government and the GSM industry”.

“The government cannot introduce an auction procedure to make such an allotment,” he said.

According to Divan, “each licensee is entitled to adequate spectrum before any new entrant is considered. Any contrary policy would be irrational, arbitrary and perverse.”

Yet another interesting point was made by senior advocate S Ganesh. He has said “government orders do not at all exclude or rule out the allocation of further or additional spectrum over and above 15 Mhz, in the event of further increase in the subscriber base …”

He also said that “once having chosen a platform (GSM or CDMA), the operator cannot ask for spectrum for other platform than the already chosen one.”

Senior advocate C S Vaidyanathan is of the view that “the government cannot renege on its contractual obligations by auctioning spectrum.

“In fact, pricing it in any other way except by way of revenue-sharing,” he said. Meanwhile, the government has set a cut-off date for receiving fresh applications for telecom licences.

“It has been decided that new applications for Unified (Telecom) Access Services (UAS) licences will not be accepted by the Department of Telecommunications (DoT) after October 1, 2007, till further orders,” according to a government order issued on Monday.

This is despite the Telecom Regulatory Authority of India (Trai) recommending that there should be no cap on the number of service providers. There’s no cap on the number of operators now.

The flurry of applications for UAS and scarcity of spectrum triggered the government order, according to a DoT order.

The long queue of applicants had also resulted in a school of thought that 2G spectrum auction may be a way out in the current scenario.

Currently, 2G spectrum allocation is subscriber-linked. In the recent Trai recommendation, the subscriber criteria had been increased for 2G spectrum allocation.

In the past one month or so, more than 160 applications have been received by the DoT for UAS licences.

Among the new applicants in queue are Swan, Cheetah, S Tel, Datacom Solutions, Alliance Infratech, Parsvanath and Unitech. Another real estate major-DLF-is also believed to be planning to apply to DoT.

In a legal notice to DoT, COAI recently said that existing GSM service providers must be allotted spectrum before others.

Referring to new applications, COAI director general TV Ramachandran said as the applications were from companies with no telecom background, “it was possible that these were just proxies for vested interests”.