Indian Telecom Spectrum Auction

In India, the Department of Telecommunications (DoT) conducts auctions of licenses for electromagnetic spectrum. India was among the early adopters of spectrum auctions beginning auctions in 1994.

A telecom company that wishes to offer services in any of the 22 telecom circles in India must purchase a Unified Access Services (UAS) license to operate that circle. Licences are awarded by auctions. The UAS, introduced in November 2003, is valid for a period of 20 years, which can be extended by an additional 10 years once per licence per circle. Initially, a mobile network operator that was awarded a licence to operate in any of the 22 telecom circles in India was allocated frequencies in that circle for a fixed time period. After the expiry of the licence, the company would have to bid to renew the licence. A new telecom policy announced by the government in 2011, delinked spectrum from licences. As a result, when an operator renews its licence it must also pay separately for spectrum.

The first telecom spectrum auction in India was held in 1994. Auctions were held again in 1997, 2000, and 2001. Spectrum in the 900MHz band was auctioned in all these years except 2001, while 1800 MHz band spectrum was auctioned for the first time in 2001.Following the 2001 auction, the government abandoned the practice of auctions in favour of an administrative allocation model. Under this model, the government would select companies that it deemed were best equipped to develop India's telecom infrastructure. The final allocation of 900 MHz took place in 2004, through the new model. This policy resulted in spectrum being allocated at far lower prices than had been done through auctions. For example, Reliance had paid ₹12.25 crore and ₹58.49 crore in 1995 for 4.4MHz spectrum in West Bengal and Orissa respectively. In 2004, Airtel was allocated the same amount of spectrum in the same circles for ₹1 crore and ₹4.4 crore respectively.

In 2008, 122 new 2G UAS licenses were granted to telecom companies on a first-come, first-served basis at the 2001 price. According to the Central Bureau of Investigation (CBI) charge sheet, several laws were violated and bribes paid to favour certain firms in granting 2G spectrum licenses. According to a CAG audit, licenses were granted to ineligible corporations, those with no experience in the telecom sector (such as Unitech and Swan Telecom) and those who had concealed relevant information. The Indian National Congress coalition government undercharged mobile telephone companies for frequency allocation licenses, which they then used to create 2G spectrum subscriptions for cell phones. The difference between the money collected and that mandated to be collected was estimated by the Comptroller and Auditor General of India at ₹1.76 trillion (US$26 billion), based on 2010 3G and BWA spectrum-auction prices. In a chargesheet filed on 2 April 2011 by the CBI, the loss was pegged at ₹309,845.5 million (US$4.6 billion).

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