The supreme court judgment of February 15, 2013 puts the entire dialogue of spectrum reframing – that is, taking away the spectrum from operators in a particular frequency band and selling it at market rates to others – in a litigation tangle.

While the court ruling has cheered old operators like Vodafone and Airtel, both of which are opposed to reframing, it has put the department of telecom in a fix over the way forward.

The judgment says:

* The entire spectrum released as a result of quashing l of licences on February 2, 2012 shall be auctioned without further delay.

* Since the issue relating to the allotment of spectrum in 900 MHz was not a subject matter of this court, we deem it proper to make it clear that the judgment dated February 2, 2012 will have no bearing on litigation filed in the matter of allotment /allotment of spectrum in 900 MHz band and the competent judicial/quasi-judicial forum shall be free to adjudicate upon pending matters.

* Licensees who continue to operation post February 2, 2012 shall pay the reserve price fixed by the government for the purpose of conduction of auction in November 2012.

* The licensees who did not bid in November auctions shall a forthwith discontinue their operations in concerned circle areas.

Industry reactions to the judgment vary. The GSM operators’ body COAI was “pleased with the supreme court order”. Russia-based CDMA player Sistema said, "The honourable supreme court's order on does NOT impact the company and any of its operations as it relates to telecom operators who had not participated in the spectrum auctions on November 12 and 14, 2012. The auctions done on the said dates were for the GSM spectrum (1,800 MHz). SSTL on the other hand being a pure play CDMA operator provides its telecom services using the 800 MHz spectrum. It may also be noted that the company had filed an application dated January 10, 2013 in the supreme court saying that the company wants to continue its operations and intends to participate in upcoming auctions in March 2013. The honourable supreme court is going to give a separate order on the same. The said order is awaited."

The judgment has a set of repercussions. Operators like Vodafone and Airtel are expected to challenge the government’s intention of taking away the spectrum held by them in 900 MHz band (considered to be more efficient than 1,800 MHz where the reframed spectrum would be available).

Based on the order the fallout of the judgment is as follows:

* Operators like IIKE and Vodafone will challenge the government’s intention of reframing spectrum in 900 MHz band.

* Upcoming auctions beginning March 2013 will be impacted, depending on operators’ possible decision to take the matter to court and how the government reacts to it.

* The government will be forced to auction approximately 430 MHz of spectrum as opposed to half of that figure in the upcoming March auctions.

* Availability of more spectrum is likely to ease the prices they fetch in the market.

It is now up to the policymakers to find a way out of the situation. While the telecom department expects a regime change it may well be aware of the pitfalls. A long-drawn court process may get it the sound bites but not its meat.

Background

Unsuccessful bidders in 2G auction to cease operation: SC

(PTI, Feb 15) The Supreme Court on Friday held that telecom companies which were unsuccessful in availing fresh 2G spectrum and those which did not participate in the auction process will cease to operate “forthwith.”

However, telecom companies which were successful in the fresh auction held on November 12 and 14, 2012 will be asked to start their services in the respective circles immediately, the court ruled.

“The telecom companies which have been unsuccessful in the bidding and those after the cancellation of the licences did not participate in the fresh auction are directed to cease from continuing from operation forthwith and the successful bidders will immediately start in their respective circles,” the court said.

A bench comprising justices G.S. Singhvi and K.S. Radhakrishnan directed that those telecom companies which were allowed to continue operation after scrapping of their licences by February 2, 2012 judgment will have to pay the reserved price fixed for the licences in the first round of the auction held in November 2012.

The apex court by its interim orders had extended the deadline for them to continue with the operation.

The bench clarified that the apex court’s Feb 2, 2012 judgement will not be applicable on telecom companies holding the spectrum with 900 MHz band.

“The February 2, 2012 order will have no bearing on litigation relating to 900 MHz band,” the bench said, adding that it (900 MHz band spectrum) was not the subject matter before it.

The bench also directed to immediately put on fresh auction entire 2G spectrum for the licences cancelled by it.