The Union Cabinet has approved the spectrum trading in all bands, in a move to allow optimal utilisation of spectrum. The telecom operators will now be able to trade unused spectrum with each other. Spectrum trading is expected to improve the quality of services through increased availability of spectrum as well as enable consolidation in the industry.

According to the Ministry of Communications and IT, the ownership right of spectrum will remain with the Government of India and only its right to use can be traded. The buyer will have to pay 1 per cent trading fee which will be calculated based on market rate or the previous auction price, whichever is higher. For spectrum trading agreements, the telecom operators will not require any prior permission from the government but will have to inform the same 45 days before. Further, the parties, the buyer as well as the seller will have to provide an undertaking to ensure that their agreement is in compliance to all rules and regulations.

The Telecom Regulatory Authority of India (TRAI) in its recommendations had stated that spectrum traded will not change the original validity period for which it has been allocated to a telecom company. Meanwhile, it had recommended a lock-in period of 2 years on spectrum that a company acquires through auction before it can be traded.