Spectrum auction: The irony

It is ironical that the clearance by the Union Cabinet of what will be India’s largest auction of spectrum has not evoked much enthusiasm from the telecom players. Earlier the government used to be faulted for rationing spectrum and creating an artificial shortage. This time it has been very liberal in putting on sale spectrum of various bandwidths, including for the first time the 700 megahertz band — the most expensive and most efficient. It hopes to net a total of Rs 5.66 lakh crore to help shore up its treasury.

But all indications from the initial reaction is that this Rs 5.66 lakh crore target may not be met to a great extent. The only firm bidder as of now could be Mukesh Ambani, who has planned to invest $22 billion in his telecom venture and is cash-rich enough to bid for the spectrum he will need across India. The rest of the industry is burdened with a collective debt of Rs 3.8 lakh crore. Other players in the business feel they are at present not in dire need of spectrum and so may be lukewarm. There is still time for the auction — it could well be two months away — as it takes time to make arrangements after the Cabinet takes a decision.

The main issue remains that of call drops. Despite pressure from the Telecom Regulatory Authority of India, little is being done by most of the firms. The courts, too, sided with the telecom companies when they challenged Trai’s move to penalise them for call drops, so they are lax about rolling out the optic-fibre networks needed to keep pace with the burgeoning number of subscribers.