A high-powered ministerial panel headed by Finance Minister Pranab Mukherjee has decided to allow existing telecom operators to bid for only one block of spectrum to be offered in the August auction while three blocks would be available for new players.
The Empowered Group of Ministers (EGoM ) in its June 5 meeting is believed to have decided that existing operators be allowed to bid for one block of 1.25 MHz, sources privy to the development said.
New entrants, on the other hand, will be required to bid for a minimum of two blocks each of 1.25 MHz. They would also be allowed to bid for one additional block of 1.25 MHz.
The government proposes to auction at least 10 Mhz of spectrum in blocks of 1.25 Mhz each. It has decided to provide additional spectrum of up to 3.75 Mhz to ensure that entire 10 Mhz spectrum is sold through auction.
Department of Telecom (DoT) officials said only 11 circles in the country clearly have 13.75 MHz of spectrum available for the auction.
In the auction, a new company seeking to start mobile telephony in India will have to acquire minimum of 5 Mhz spectrum.
However, there was cap of two blocks on incumbent players willing to bid for spectrum.
EGoM in its meeting on June 5 reduced this cap on a player to one block of spectrum for existing players which means that up to two incumbent mobile telephony service provider can win spectrum in the auction.
Government sources said that as per minute of meeting of EGoM, new entrant or companies whose licences have been cancelled by the Supreme Court in February 2 order can bid for a minimum of two blocks each of 1.25 Mhz and they will be also allowed to bid for one additional block of 1.25 Mhz.
The Supreme Court on February 2 cancelled telecom licences of 9 companies either in all or in select circles.
Out of this, only three players namely Sistema Shyam, Uninor and Videocon have expressed interest in continuing their business.
Permits of Idea Cellular and Tata Teleservices were also cancelled in some telecom circles by the apex court.
The EGoM has also decided that all spectrum that will be assigned in future shall be liberalised which means that service providers will be allowed to provide any service as per their licence using any technology for any frequency.
At present, 2G GSM services are provided in using airwaves frequency in 900 Mhz and 1800 Mhz band, CDMA technology based service in 800 Mhz band.
Decision has been taken to allow existing players in 1800 Mhz spectrum band to liberalise their spectrum for a period of 20 years on payment of price of spectrum discovered through auction, sources said.
The entry fee already paid by the existing players opting for liberalisation of spectrum may be adjusted on pro-rata basis only on one occasion which is at the time of conversion of old spectrum usage right to liberalised spectrum, sources said.