New Delhi, November 11
The auction for telecom Spectrum through which the government hopes to meet Rs 40,000-crore revenue target begins tomorrow. The move, however, could face legal challenges from telecom operators that have been upset over some recent decisions.

Officials at the Department of Telecom (DoT) said the auction for the GSM airwaves that became available following the cancellation of 122 telecom licences by the Supreme Court in February, would start at 9 am.

The apex court had cancelled 22 licences of Uninor, 21 of Loop Telecom, 21 of Sistema Shyam, 13 of Idea Cellular (including Spice Communications), 21 of Videocon, 15 of Etisalat DB (formerly Swan Telecom), six of S-Tel and three CDMA licences of Tata Teleservices.

Of the airwaves that were freed, the government is auctioning a maximum of 11 blocks of airwave frequencies in each circle, barring Delhi and Mumbai where there are only eight blocks.

There has not been a very enthusiastic response to the auction from telcos, which have been complaining that the base price approved by the government for the auction was too high and the final price arrived after the auction would not be much higher, as was being expected by the DoT.

Incidentally, none of the GSM operators is bidding for airwaves on pan-India level. Analysts say there would be few circles, if any, where some competition will be seen.

The government has set a base price of Rs 14,000 crore for 5 MHz of GSM airwaves in the 1,800 MHz band on pan-India basis. Experts point out that only 37 new applications have been filed (17 Videocon, seven Idea and 13 Telenor) for 44 available slots of 1,800 Mhz Spectrum pan-India, which means two new operators could be accommodated in each of the 22 circles.

Bharti Airtel and Vodafone have applied for five and 17circles, respectively.

The lacklustre response aside, which could even see no bidding in some circles, the recent contentious decisions taken by the government may actually lead to another round of uncertainty in the telecom sector.

Reports suggest that the GSM operators are bracing up to challenge at least two of the recent decisions of the government in court.

The government last week decided to impose one-time Spectrum charges on incumbent GSM operators for Spectrum that they hold beyond 4.4 MHz and 2.5 MHz for CDMA players. Besides, earlier it decided to carry out refarming of Spectrum in the 900-to-1,800 MHz band, allowing incumbent operators to keep only 2.5 MHz.

GSM operators body Cellular Operators Association of India (COAI) says they will challenge refarming in the court because under their contract, licences were supposed to be extended and not renewed. So the government cannot change the conditions of the licence by forcing them to give back part of the 900 Mhz Spectrum.

CDMA operators are also readying to challenge the decision of the government asking them to pay one-time Spectrum charges prospectively.