Updated: May 14, 2012 (Initial publication: May 6, 2012)

Breaking news

The Telecom Regulatory Authority of India (TRAI - भारतीय दूरसंचार विनियामक प्राधिकरण) issued on 2 April 2012, recommendations for the auction of spectrum for 3 G mobile operators.


As in all systems of telecommunications in the world backed to a liberalized market, the one organized in India foresees the granting of licences to operators. It is the Government that allocates licenses, but it is the regulator (the Telecom Regulatory Authority of India - TRAI) that provides the financial terms to set the price of the licenses. On May, 2 2012, the regulator has proposed to use the auction method. The association of operators protested. This method led indeed generally priced higher than other methods of pricing of licenses assigned.

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The India is the second country in the world to mobile phone, after the United States. This is currently to renew licenses, to make to switch to the generation 3 G. The manner in which it is appropriate to fix the amount of licenses that State allocates to operators (on any sectors and the object of the licence to exercise such activity) is a very important economic and political issue.

Not only the terms and conditions, but the designation of any person who has the authority to fix the amount is also an issue under discussion, because margin of discretion offered by this power. Regulators claim the exercise, but Governments consider themselves to only licensees, as it comes to dispose of public space, thus made available to commercial operators. The India therefore retains the power to the Government, but the regulator makes recommendations.

 However, the matter is so technical and so political, that it is rare that the recommendations of the regulator, especially if it has the "authority" (in the sense where is it meant political philosophy), are followed by the Government. Here, the regulator recommends a method of auctioning of licenses which led to a large amount.

The auction still produces this instead of the method of "beauty contest". The mobile operators around the world, through their association, GSMA, protested, arguing that the money they should thus mobilize to acquire licences couldn’t be used to build the infrastructure needed for the G3. Thus, which brings the State (license) is backfiring on the consumer (quality of service).

It is mainly in terms of the margin of discretion of power, between the one of the State, smaller in a technique of auctions that we can appreciate the approach.

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