A day after the SC rendered 122 2G telecom licences null and void, the country’s apex telecom body, Telecom Regulatory Authority of India (TRAI), which will preside over fresh 2G auctions in four months, released a notice asking stakeholders to provide comments on the same by February 15.

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In a 2010 consultation paper, TRAI recommended that spectrum be de-linked from licences in the future and also called for a unified licensing regime. While this will be followed, a dilemma arises on fixing of the market rate, which as per guidelines, needs to be fixed in line with the rate in the last auction. Since, the only preceding spectrum auction India has had is the 3G auction, the 3G market rate is what should be followed here as well. However, that may prove too expensive for 2G.

“TRAI has to get feedback much before the 3 month deadline provided by the Supreme Court, as it has to issue notices to allow participants to prepare for the auctions, depending on the reserve price fixed. The biggest dilemma for stakeholders will be pricing, because if it is priced too high, it will be commercially unviable for operators, and if the reserve price is too low, the government can again be accused of gifting away spectrum,” says Ashish Basil, partner with a member firm of Ernst & Young.

However, there is another route for fixing the price, which is a formula between 2G and 3G which will then provide an appropriate market price. There is also a chance that the reserve price may be fixed based on 2001 rates and not according to the 3G reserve rate.

Mahesh Uppal, director, Com First (India), a firm that specialises in regulatory affairs, says: “I would imagine that it would be better to fix the reserve price based on previous auctions. While fixing a high rate would be a problem as it would raise the risk of fewer bidders, a low price would ensure that every player is allowed to participate, without any risk to the exchequer.”

It will also be interesting to see which players will be allowed to bid in the forthcoming auctions, whether or not it will be a general auction, and the fate of the tainted operators, all of which are set to be decided by the stakeholder’s comments to TRAI’s pre-consultation paper on the 2G auctions.