The Department of telecommunications (DoT) is contemplating to separate the issue of spectrum from license, a move that can help develop a suitable long term policy for the 2G spectrum allocation. DoT came under heavy criticism last year after it issued 2G licenses to a number of new entrants at the same prices that were charged from the now established telecom companies years ago.

As a result, the telecom ministry has been looking for ways to develop a sustainable policy for 2G spectrum allocation. The proposal to separate spectrum from license is a step in this very direction. What it means is that the companies may first have to apply for a telecom licences and then bid for spectrum once they get the license.

Currently, DoT bundles 2G spectrum along with the telecom license, which for a pan-Indian India presence costs Rs 1,651 crore. While the GSM services licence comes bundled with 4.4 MHz of start-up spectrum, a CDMA operator would get 2.2 MHz of the spectrum. Additional spectrum is given to telcos once their subscriber base has reached a critical minimum level.

However, the government has been criticised of this kind of setup and has been advised to follow the international best practice of auctioning the spectrum to discover true price of the scarce resource. Once the government separates the license from the spectrum, it can award new licences and then hold an auction for spectrum. While it will ensure more transparency, revenue of the government will also increase. The DoT has written to the telecom regulatory of authority of India (TRAI) in this regard and sought the opinion of the regulator on separating the license and spectrum.