TRAI allows trading in spectrum, proscribes leasing

The Telecom Regulatory Authority of India (TRAI) has announced guidelines for trading in radio spectrum, allowing mobile operators to buy and sell airwaves.

Operators can trade spectrum which they have bought through auction or have paid market prices but cannot lease it to third parties.

The government may collect a transaction fee equivalent to one per cent of the transaction amount, on the spectrum being traded between telecom companies.

However, spectrum allocated administratively cannot be traded.

Spectrum trading is expected to result in consolidation of the telecom industry as it will allow operators to buy and sell airwaves according to their needs.

• Under spectrum trading, only outright transfer of spectrum is permitted, ie, the ownership of the usage right is transferred to the buyer. Spectrum leasing is not permitted at this point of time.
• Spectrum trading will not alter the original validity period of spectrum assignment.
• For the present, spectrum trading will be permitted only on a pan-LSA (Licensed Service Area) basis, ie, spectrum cannot be traded for a part of the LSA.
• The seller and the buyer will be required to inform the licensor regarding the spectrum trade, six weeks prior to the effective date of trade. However, no permission will be required from the licensor (government) for spectrum trading.
• All spectrum bands earmarked for Access Services by the licensor will be treated as tradable spectrum bands. Currently spectrum in 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz spectrum bands have been allocated for Access Services.
• Only CMTS/UASL/UL (AS)/UL licensees will be eligible to participate in the spectrum trading. The entire spectrum held by the licensee in a particular spectrum band within an LSA would be tradable, ie, it has either been assigned through an auction in the year 2010 or afterwards, or on which the TSP has already paid the prescribed market value (as decided by the government from time to time) to the government.
• There is also a lock-in period for the spectrum traded. If an operator buys spectrum through the trading route, then it will not be permitted to sell any airwaves in the same frequency band for two years.

Earlier, TRAI in its recommendations on 'Valuation and Reserve price of Spectrum', issued on 9 September 2013, had recommended that spectrum trading should be permitted in the country.

The department of telecom (DoT) had also, in its reference dated 11 October 2013, conveyed its in-principle acceptance of TRAI's recommendation to permit spectrum trading in the country.

The seller is free to choose the mechanism to find a prospective buyer, including the auction route.

Spectrum trading refers to the transfer of rights to use the spectrum. The words 'seller' and 'buyer' are used in the context of transferring the rights from one user to another.

When a block of spectrum is traded, the associated rights and obligations of the spectrum block shall stand transferred from the seller to the buyer.