After several rounds of discussions, the Telecom Regulatory Authority of India (TRAI) has finalised its recommendations on the Working Guidelines for Spectrum Trading.

In September 2013, the regulator, in its recommendations on the Valuation and Reserve Price of Spectrum, had stated that spectrum trading should be allowed in India. In October, the Department of Telecommunications gave its in-principle approval to the same. Thereafter, the regulator formed a committee comprising TRAI officials as well as representatives from various telecom operators for framing the working guidelines for spectrum trading, which are as follows:

•Spectrum trading refers to the transfer of rights to use spectrum. The terms seller and buyer are used in the context of transferring the right for the same from one user to another. When a block of spectrum is traded, the rights and obligations associated with the spectrum block will be transferred to the buyer.

•Under spectrum trading, only outright transfer of spectrum will be permitted. Spectrum leasing is not allowed for now.

•Spectrum trading will not alter the initial validity period of the spectrum assigned.

•The seller will be responsible for all dues and recoveries until the effective date of transfer, following which the buyer will be accountable for the same.

•A licensee will not be allowed to trade spectrum if there is a breach of licence terms and conditions.

•For the time being, spectrum trading will be permitted only on a pan-licensed service area (LSA) basis, that is, spectrum cannot be traded for a part of the LSA.

•The seller and buyer will be required to inform the licensor about the spectrum trade six weeks prior to the effective date of trade. Spectrum trading will be permitted only in the 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands.

•Spectrum trading will be permitted only in the following block sizes: 2x1.25 MHz in the 800 MHz band; 2x200 kHz in the 900 MHz band; 2x200 kHz in the 1800 MHz band; 2x5 MHZ in the 2100 MHz band; 20 MHz in time division duplex in the 2300 MHz band; and 2x10 MHz in frequency division duplex (FDD) in the 2500 MHz band.

•The terms and conditions attached to spectrum under the provisions specified in the relevant notice inviting application document will continue to apply after the transfer of spectrum unless specifically mentioned.

Eligibility conditions for participating in spectrum trading:

•Only CMTS/UAS/unified and AS/unified licensees will be eligible to participate in spectrum trading.

•To participate in trading, the net worth requirement of buyers would be Rs 1 billion for each service area except Jammu & Kashmir and the Northeast, where it will be Rs 500 million.

•The net worth of promoters having at least 10 per cent paid-up equity holding in the company participating in the trading (the buyer) will also be considered.

•The buyer will have a minimum paid-up equity capital equal to one-tenth of the net worth mentioned while applying for transfer of spectrum. This paid-up equity requirement would be in addition to the prescribed paid-up equity for obtaining a unified licence.

•The buyer should comply with the spectrum cap of 25 per cent of its total spectrum holding in the 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands with the applicable paired band, and 50 per cent within a given band in each LSA.

•In case the seller had acquired spectrum through an auction and opted for the deferred payment route, the seller should clear its spectrum usage charge and payment instalments.

•In case an issue pertaining to the spectrum proposed to be transferred is pending with a court, the seller will ensure that its rights and liabilities are transferred to the buyer as per the procedure prescribed under the law. Further, any such transfer of spectrum will be permitted only after the interest of the licensor has been secured.

•The company purchasing spectrum is required to acquire a wireless operating licence or ensure that its own licence is amended by the Wireless Planning and Coordination (WPC) wing before using the spectrum.

•The right to use spectrum is subject to fulfilment of relevant licence conditions.

Criteria for buyers and sellers

Seller

•If the company sells the entire quantity of spectrum in a band, the contingent roll-out obligation for the airwaves will be transferred to the buyer.

•If an operator plans to sell only a part of the spectrum, it will be accountable for the roll-out obligations associated with the spectrum band. Further, the seller has to ensure that it continues to hold a minimum quantity of spectrum in that band in order to meet roll-out obligations and adhere to the quality of service norms as prescribed by TRAI and the licensor.

Buyer

•The buyer will be responsible for the roll-out obligations linked with the spectrum being acquired. If it acquires the entire spectrum holding of the seller, the time period for compliance with roll-out obligations will be the same as was initially prescribed, subject to a minimum of two years and the validity period for the spectrum.

•If the buyer is acquiring a part of the spectrum holding in a band, both the seller and buyer will be responsible for roll-out obligations. However, to meet these obligations, the buyer will be entitled only to the time period originally provided during the assignment of spectrum.

•Meeting of some or all roll-out obligations by the buyer through its prior spectrum holding in the same band will be taken into account while specifying new obligations for additional airwaves.

•The buyer has to ensure that after trading it acquires a minimum quantum of spectrum in that band so as to meet the roll-out obligations and QoS norms as prescribed by TRAI and the licensor.

•If spectrum is intended to be used for any purpose other than its present usage after trading, the buyer’s technology details have to be intimated to the WPC wing.

•The buyer has to make a provision for the guard-bands from its spectrum holding to ensure that there is no interference for other users that hold adjacent spectrum.

•An operator will not be permitted to trade spectrum in the band in which it has acquired airwaves through trading (or an auction) for two years from the effective date of transfer or the date of assignment of spectrum.

•A non-refundable transfer fee of 1 per cent of the transactional amount or 1 per cent of the prescribed market price, whichever is higher, will be imposed on all spectrum trade transactions. The transfer fee will be paid to the government.

•Frequency swapping/reconfiguration, that is,  rearrangement of spot frequencies in the same band, from within the assignments made to the licensees will not be treated as trading of spectrum.

Spectrum trading process

•Spectrum trading will be a two-party/ licensee transaction. However, the seller may opt for other methods such as through tenders and an auction to find a prospective buyer.

•The banks/financial institutions/ lenders that have entered into a tripartite agreement with the licensor and the licensee for spectrum held by the licensee will not be allowed to trade spectrum.