Lok Sabha Question No. 1831 (UNSTARRED), answered on 2015-12-09
Subject: Sharing and Trading of Spectrum
Ministry: COMMUNICATIONS AND INFORMATION TECHNOLOGY
Asked by: A. ARUNMOZHITHEVAN, VINOD KUMAR BOIANAPALLI, JOSE K. MANI, K. MARAGATHAM, GEETHA KOTHAPALLI, R. VANAROJA

## MINISTRY OF COMMUNICATIONS AND INFORMATION TECHNOLOGY

## GOVERNMENT OF INDIA DEPARTMENT OF TELECOMMUNICATIONS

## LOK SABHA UNSTARRED QUESTION NO.1831 TO BE ANSWERED ON 9 th  DECEMBER, 2015

## SHARING AND TRADING OF SPECTRUM

## 1831. SHRI A. ARUNMOZHITHEVAN:

SHRI B. VINOD KUMAR:

SHRI JOSE K. MANI:

SHRIMATI K. MARAGATHAM:

SHRIMATI KOTHAPALLI GEETHA:

SHRIMATI VANAROJA R.:

Will  the  Minister  of  COMMUNICATIONS  AND  INFORMATION  TECHNOLOGY be pleased to state:

- (a) whether the Government has finalised the guidelines for sharing and trading of spectrum by service providers recently;
- (b) if  so, the details and salient features thereof along with the likely benefit of the initiative;
- (c) whether the leasing of spectrum is allowed under the guidelines and whether the terms and conditions attached to the allocated spectrum remain the same even after the transfer;
- (d) if so, the details thereof; and
- (e) whether the Government is considering coming out with a spectrum liberalisation policy soon and if so, the details thereof?

## ANSWER

## THE MINISTER OF COMMUNICATIONS AND INFORMATION TECHNOLOGY (SHRI RAVI SHANKAR PRASAD)

- (a) Yes Madam.
- (b) The details  and  salient  features  of  spectrum  sharing  and  spectrum  trading  are attached at Annexure I.
- (c) No Madam.
- (d) Does not arise in view of (c) above.
- (e) The guidelines for liberalisation of administratively allotted spectrum in 800 MHz and  1800  MHz  frequency  bands  have  been  issued.  The  details  are  attached  at Annexure II.

Contd…...2/-

## Spectrum Sharing

Spectrum sharing allows operators to pool their respective spectrum for usage in a specific geographical area and thus complementing each other's needs and ensuring more  efficient  utilisation  of  the  spectrum.    Moreover,  the  pooling  of  the  spectrum increases the spectrum efficiency for both the operators as the capacity to carry telecom traffic is not in linear proportion to sum of their spectrum holding but is much larger than the sum of the traffic capacities of individual service provider.

The salient features of the spectrum sharing include:-

(a) Spectrum sharing shall be allowed only for the access service providers holding Cellular  Mobile  Telephone  Service  (CMTS)  /Unified  Access  Service  License  (UASL) /Unified  License  (Access  Services)(UL(AS))/Unified License (UL) with authorisation of Access Service in a Licensed Service Area (LSA), where both the licensees are having spectrum in the same band.

(b) Sharing is permitted in the following scenarios:

- (i)  For  the  spectrum  where  both  the  licensees  possess  the  spectrum  for which  market  price  has  been  paid  with  the  clarification  in  respect  of spectrum in 800 MHz acquired in the auction held in March 2013, sharing of spectrum shall be permitted only if the differential of the latest auction price and the March 2013 auction price on pro-rata basis on the balance period of right to use the spectrum is paid.
- (ii)  In  case  both  the  Licensees  who  plan  to  share  spectrum  are  having  the administratively allotted spectrum in that band, the sharing of spectrum is permitted  only  when  both  the  licensees  have  paid  One  time  Spectrum Charges (OTSC) for their respective spectrum holdings, above 4.4 MHz (GSM)  /  2.5  MHz  (CDMA)  based  on  reserve  price/auction  determined price. However if the said amount is not paid due to judicial intervention in judicial  forums  barring  any  coercive  action,  in  the  interim,  sharing  of spectrum in such cases will also be permitted subject to submission of a bank  guarantee  for  an  amount  equal  to  the  demand  raised  by  the department  for  one  time  spectrum  charge  pending  final  outcome  of  the court case.
- (iii)  where  one  licensee  has  spectrum  acquired  through  auction/trading  or liberalised spectrum and  the other has spectrum allotted administratively, sharing  is  permitted  only  after    the  spectrum  charges  for  liberalising  the administratively allocated spectrum are paid. Further, in case of spectrum acquired in auction held in March 2013, differential amount as indicated in para (b)(i) above shall be payable in respect of 800 MHz band.

(c) Spectrum  Usage  Charges  (SUC)  rate  of  each  of  the  licensees  post-sharing shall increase by 0.5% of Adjusted Gross Revenue (AGR).

(d) Spectrum sharing shall be available for upto the balance period of the licence or upto the period of right to use spectrum, whichever is earlier.

- (e) The  prescribed  limits  for  spectrum  cap  shall  be  applicable  for  both  the licensees individually. Further, the spectrum holding of any licensee post-sharing shall be counted after adding 50% of the spectrum held by the other licensee in the band being shared being added as the additional spectrum to the original spectrum  held by the licensee in the band.
- (f) A  prior  intimation by both the licensees shall be given jointly for sharing the right to use the spectrum at least 45 days before the proposed effective date of sharing. Both the licensees shall also give an undertaking that they are in compliance with all the terms and conditions of guidelines for spectrum sharing and the licence conditions and will  agree  that  in  the  event,  it  is  established  at  any  stage  in  future  that  either  of  the licensee  was  not  in  conformance  with  the  terms  and  conditions  of  the  guidelines  for spectrum sharing or/and of the licence at the time of giving intimation for sharing of right to use the spectrum, the Government will have the right to take appropriate action which inter-alia may include annulment of sharing arrangement.

## Spectrum Trading

Spectrum trading allows parties to transfer their rights to use the spectrum and obligations to another party. This allows better spectrum usages as the idle spectrum from  the  hands  of  one  service  provider  gets  transferred  to  the  other  service  provider who is facing spectrum crunch. This also improves customer satisfaction and services of the service provider acquiring spectrum.

The salient features of spectrum trading are as below:

- (a) Spectrum trading  shall  be  allowed  only  between  two  access  service  providers, holding  Cellular  Mobile  Telephone  Service  (CMTS)  License,  Unified  Access Service License (UASL), Unified License (Access Services)(UL(AS)) and Unified License (UL) with authorisation of Access Service in a licensed service area.
- (b) Only  outright  transfer  of  right  to  use  the  spectrum  from  the  seller  to  the  buyer shall be permitted. Leasing of spectrum is not permitted.
- (c) Spectrum trading will not alter the original validity period of spectrum assignment as applicable to the traded block of spectrum.
- (d) The seller shall clear all its dues prior to concluding any agreement for spectrum trading. Thereafter, any dues recoverable up to the effective date of trade shall be the liability of the buyer. The Government shall, at its discretion, be entitled to recover the amount, if any, found recoverable subsequent to the effective date of the trade, which was not known to the parties at the time of the effective date of trade, from the buyer or seller, jointly or severally. The demands, if any, relating to licenses of seller, stayed by the Court of Law, shall be subject to outcome of decision of such litigation.
- (e) Only the spectrum in the 800/900/1800/2100/2300/2500 MHz bands is permissible to be traded which has either been assigned through an auction in the  year  2010  or  afterwards,  or  on  which  the  Telecom  Service  Provider  (TSP) has already paid the prescribed market price. In respect of spectrum in 800 MHz band acquired in the auction held in March 2013, trading of spectrum shall be permitted only if the differential of the  latest  auction  price  and  the  March  2013 auction price on pro-rata basis on the balance period of right to use the spectrum is paid.

- (f)  Buyer will be allowed to use the spectrum acquired through trading to deploy any technology by combining it with their existing spectrum holding in the same band after converting their entire existing spectrum holding into liberalised spectrum in that band as per the prevalent terms and conditions.
- (g) The  buyer  should  be  in  compliance  of  the  prescribed  spectrum  caps  declared from  time  to  time.  The  spectrum  acquired  through  trading  shall  be  counted towards the spectrum cap by adding to the spectrum holding of the buyer.
- (h) The seller should clear its Spectrum Usage Charges (SUC) and its instalment of payment (in case seller had acquired the spectrum through auction and opted for deferred payment) till the effective date of trade and thereafter, the buyer shall clear all these dues.
- (i)  A non-refundable transfer fee of one percent (1%) of the transaction amount of aforesaid trade or one percent (1%) of the prescribed market price, whichever is higher  shall  be  imposed  on  all  spectrum  trade  transactions,  to  cover  the administrative  charges  incurred  by  Government  in  servicing  the  trade.  The transfer fee shall be paid by the buyer to the Government. Transaction amount refers to the amount payable by the buyer to the seller to purchase the rights to use  the  spectrum  block(s).  It  will  be  decided  exclusively  by  the  buyer  and  the seller.  The  market  prices  shall  be  equal  to  the  auction  determined  amount prorated  for  the  balance  validity  period  of  spectrum  assignment.  In  case  more than  one  set  of  market  determined  prices  are  available,  the  latest  market determined price available at the time when the TSP wants to trade its spectrum holding, would be applicable. If the auction determined prices are more than one year old, the prevailing market price shall be applied by indexing the last auction price at the rate of SBI PLR.
- (j)   The  amount  received  from  trading  shall  be  part  of  Adjusted  Gross  Revenue (AGR)  for  the  purpose  of  levy  of  License  fee  and  Spectrum  Usage  Charges (SUC).
- (k) Both  the  licensees  trading  the  spectrum  shall  jointly  give  a  prior  intimation  for trading  the  right  to  use  the  spectrum  at  least  45  days  before  the  proposed effective  date  of  the  trading.  Both  the  licensees  shall  also  give  an  undertaking that  they  are  in  compliance  with  all  the  terms  and  conditions  of  guidelines  for spectrum trading and the licence conditions. In the event, it is established that any of the licensee was not in conformance with the terms and conditions of the guidelines  for  spectrum  trading  as  well  as  the  licence  at  the  time  of  giving intimation for trading of right to use the spectrum, the Government will have right to  take  appropriate  action  which  inter-alia  may  include  annulment  of  trading agreement.
- (l)  Existing rates as prescribed by the Government from time to time for Spectrum Usage Charge (SUC) shall continue to apply on spectrum held by the buyer and seller.  The spectrum held by buyer shall include the spectrum acquired through trading.  Spectrum  acquired  through  spectrum  trading  shall  be  treated  akin  to spectrum acquired through auction.

## Annexure-II The details of liberalisation of administratively allotted spectrum

## in 800 MHz and 1800 MHz frequency bands

- (a) Existing  Cellular  Mobile  Telephone  Service  (CMTS),  License,  Unified  Access Service (UAS) License, and Unified License (UL) with access service authorisation licensees may liberalise their entire administratively allotted spectrum  holding  in  800  MHz  and  1800  MHz  band  in  a  Service  Area  for  the balance validity period of right to use spectrum.
- (b) Administratively allotted spectrum in 800 MHz and 1800 MHz bands refers to the spectrum allotted prior to auction of right to use spectrum in November, 2012.
- (c) After the in-principle approval of the competent authority that the liberalisation of administratively  allotted  spectrum  of  the  Telecom  Service  provider  (TSP)  is permitted subject to receipt of necessary payment in this regard, a demand note to  the  concerned  TSP  indicating  the  total  amount  payable  and  due  date  of payment and terms of payment will be issued by the Department.
- (d) The spectrum will be required to be liberalised for the balance validity period of right to use the same after payment of auction determined price prorated for the balance validity period.
- (e) The entry fee paid will be pro-rated for the balance validity period of right to use spectrum and will be deducted from the total amount to be paid by the TSP for liberalising the spectrum.
- (f)  In case more than one set of auction determined prices are available, the latest auction determined prices for the respective frequency band as available at the time  of  calculation  of  charges/amount  payable  for  liberalisation  of  spectrum, would be applied.
- (g) If  the  auction  determined  price  is  more  than  one  year  old  then  the  prevailing market rates would be determined by indexing the last auction price at the rate of SBI PLR.
- (h) In  case  the  spectrum  gets  liberalised,  the  One  time  Spectrum  Charge  (OTSC) will  be  charged  up  to  the  date  for  calculation  of  charges  for  liberalising  the spectrum and the same has to be paid by the licensee. However, if such demand is  pending  due  to  judicial  intervention  barring  any  coercive  action,  a  bank guarantee  equal  to  this  amount  shall  be  submitted  pending  final  outcome  of judicial process.
- (i)  After getting the spectrum liberalised, the TSPs may combine the same with the spectrum acquired by them in the same band through auctions/trading.
- (j)  Spectrum Usage Charges (SUC) will be required to be paid for the  liberalised spectrum as prescribed by the Government from time to time.
- (k) The  above  guidelines  shall  not  be  applicable  for  liberalisation  of  a  frequency band in a service area where auction determined price is not available for that band.

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