Spectrum should be delinked from telecom licenses and be freely tradable among the telecom

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service providers, the economic survey said on Thursday.

At present, a pan-Indian telecom licence comes bundled with spectrum. For GSM services, the licence has 4.4 MHz of start-up spectrum while a CDMA operator gets 2.2 MHz of air waves.

“Disaggregate telecom licences from spectrum allocation. Telecom licences should have a nominal regulatory charge and be based on capability to provide sustained service. Spectrum should be auctioned and be freely tradable among companies having a telecom licence,” the survey said.

The auction price can be in the form of a fixed price or charge per unit of bandwidth per annum or a combination of the two, it added. “The auctioned sp-ectrum must be freely tradable, with capital gains on spectrum to be taxed under the Income Tax Act.” The auction for third generation (3G) services is expected to take place by the end of year and is likely to generate Rs 20,000-Rs 40,000 crore from the auction.

The government had announced e-auction for 3G and BWA spectrum in August 2008, but the process has not taken off as the reserve price for the radio waves is yet to be fixed. The telecom industry has over 420 million subscribers and is adding about 10-12 million users every month. The telecom sector has seen an inflow of Rs 11,595.48 crore of foreign direct investment in 2008. The government has also set a target to reach 600 million subscribers by the end of 2012. With focus on rural telephony, the survey also proposed to achieve a rural teledensity of 25 per cent through 200 million rural connections by 2011-12. Rural teledensity reached 13.81 per cent in January 2009, while urban teledensity shot up to 83.66 per cent. The survey also suggested the government should do away with annual licence fee and other charges on provision of broadband connectivity to the hinterland.

It also sought opening of access to local loop for broadband provision and designating the rural fibre-optic network as a public carrier for providing rural telecom connectivity.