How is spectrum allocated?

It''s a spectrum of opportunities so at least a dozen suitors are chasing to bid for the telecom spectrum, reports CNBC-TV18. But how exactly are the allocations done? Some say auctioning is the best mode while others feel "beauty parading" works better.

Whose spectrum is it anyways - one who can pay for it or one who needs it most! In Europe as in most other developed telecom markets like the US and Australia Spectrum belongs to the one with the thickest wallet!

Almost seven years ago, UK auctioned 5 3G licenses. It got bids from 13 players. The reserve price for the spectrum was £500 million pounds but after £150 rounds and two months of bidding, the government managed to rake in over $22 billion, the most successful spectrum auction in the world in terms of revenues.

But it sounded a death sentence for a whole lot of players who could not sustain the cost of operation and had to either sell out or fold up completely. This did not deter other countries from auctioning licenses since they believe that auctioning is the best way of ensuring the most efficient use of a scarce resource.

So the US, Australia, New Zealand have all auctioned spectrum. But in these cases operators learnt from Europe''s mistakes and bid at more reasonable prices. Though most auctions have not really encouraged new entrants or ensured better utilisation of spectrum.

The lesser mature telecom markets like countries in South Asia and Scandinavia follow the ''beauty parade'' system where there is higher level of government regulation. The regulator on their merit as perceived gives out spectrum. This ensures spectrum is given out to genuine players, and not for resale. This has worked well till now in countries like Malaysia but with the entry of more operators, this method is allegedly opaque and encourages inefficient usage.

In India opinions are divided but most experts are in favour of auctioning; They say that new and old players should be given equal opportunity to get spectrum. It will also make sure that existing operators invest in equipment to utilise the spectrum more efficiently rather than consider it bounty from the govt. But of course it could bid goodbye cheap talk or to some players! But alls fair in a free market!