A new spectrum pricing policy is on its way. It will be based on a one-time spectrum charge and an annual airwave usage fee, the latter on a revenue sharing basis.

Telecom minister Kapil Sibal has moved a cabinet note on this pricing norm for higher bands of airwaves — 800 mhz, 900 mhz and 1,800 mhz.

But this may become the basis of all spectrum pricing in future, including the lower bands (4.4 mhz to 6.2 mhz) that will be vacated as a result of last week’s Supreme Court verdict cancelling 122 licences in the 2G space.

In the new policy the annual usage charge will be a percentage of the adjusted gross revenue of the companies. The initial, one-time spectrum charge will be decided by auction through a price discovery process.

Auction will be the way all spectrum will be allotted. Existing telecom companies as well as new entrants will be eligible to join the auction.

The auction of the higher bands is proposed after the business of auctioning the vacated 2G spectrum, as directed by the Supreme Court, is over in four months, but before March next year.

The Telecom Regulatory Authority of India (Trai) has already started the process of auctioning spectrum to be vacated. The telecom ministry moved the note on the higher bands, based on a January 13 report of the Telecom Commission, three days before the Supreme Court judgment.

At least, in the auction of the higher bands the reserve price will be on a ‘service area’ and not pan-India basis.

The 15 companies that had received the now cancelled 122 licences did not have to pay any one-time levy nor were the charged any annual usage fee. What they had paid was the licensing and entry fee.

The new pricing is being considered by both Trai and the Telecom Commission for the lower bands also.

A clearer picture will emerge when Trai completes consultation with telecom companies. It has already issued a pre-consultation paper on bidding for the low-band spectrum under the 122 cancelled licences.

Prices paid for 3G spectrum will form the basis for higher-band 2G spectrum price discovery, according to an official privy to the development. The original plan was to have an inter-ministerial group determine both the one-time charge and the annual fee. But it has now been decided to use the auction mode to determine price. The department of telecom department has already consulted the ministries of finance, defence, law, information and broadcasting and industry as well as the Planning Commission on the new pricing policy, which will lead to a unified licensing regime for all services except broadcasting.