Economic Survey calls for transparent telecom spectrum auction

The Economic Survey 2008-09 tabled in parliament Thursday has sought to end the controversy surrounding allocation of radio frequency by advocating an open and transparent auction process.

"Spectrum should be auctioned and be freely tradeable among companies having a telecom licence,” the survey said.

It said the capital gains from traded spectrum should be taxed under the Income Tax Act.

"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 survey also called for licences and spectrum fee to be treated differently, suggesting, “Disaggregate telecom licences from spectrum allocation.”

This means a new telecom operator will have to pay separately for the license and the spectrum.

Currently, a licence comes bundled with 4.4 MHz of spectrum. The unified access licence, which enables an operator to offer both wireless and wireline services, comes at a price of Rs.1,650 crore.

The move by the government to unbundle spectrum from licence fee is also aimed at enabling Internet service providers to migrate to the unified access category and start offering Internet telephony.

Internet telephony is presently offered in a very limited form.

The survey noted the fast paced growth in the sector that has made India's telecom network the third largest in the world, and its wireless network the second largest.

"At the current pace, the target of 500 million connections by 2010 is well within reach,” the survey said.

Last updated on Jul 2^nd, 2009 at 14:00 pm IST--IANS