25 January, 2016
Guidelines for Sharing of Access Spectrum by Access Service Providers and Trading of Access Spectrum by Access Service Providers
The Department of Telecommunications (‘DoT’) has issued Guidelines for Sharing of Access Spectrum by Access Service Providers on September 24, 2015 (‘Spectrum Sharing Guide- lines’) and Guidelines for Trading of Access Spectrum by Access Service Providers on October 12, 2015 (‘Spectrum Trading Guidelines’). These guidelines have been introduced with a view to enable the use of spectrum in any band, to provide any service, in any technology as well as to permit spectrum pooling and to further enable optimal utilization of spectrum through appropriate regulatory framework.
i. Spectrum Sharing Guidelines
A summary of the key points of the Spectrum Sharing Guidelines are given below:
Spectrum sharing will only be permitted for access service providers holding Cellular Mobile Telephone Service (‘CMTS’), Unified Access Service License (‘UASL’), Unified License (Access Services) (‘UL(AS)’) or Unified License (‘UL’) with authorization of Access service in a Licensed Service Area (‘LSA’) and will be permitted only between Telecom Service Providers having spectrum in the same band.
The licensees are to ensure that they possess the spectrum that is intended to be shared by them. Furthermore, in respect of 800 MHz spectrum, sharing of spectrum will only be permitted if the differential between the latest auction and the auction held in March 2013 has been paid on pro-rata basis on the balance period of right to use the spectrum.
The sharing of spectrum will only be permitted if both the licensees have paid the one time spectrum usage charges for their respective spectrum holdings. The Spectrum Sharing Guidelines provide that if such amounts have not been paid due to judicial intervention, then sharing of spectrum in such cases will be permitted, subject to the submission of a bank guarantee for an amount equal to the demand raised by the DoT for one time spectrum charge, pending the final outcome of such judicial intervention.
In the case where one licensee has acquired spectrum through auction/trading/liberalized spectrum and the other has been allotted spectrum administratively, sharing of spectrum will only be permitted once the spectrum charges for liber- alizing the administratively allotted spectrum have been paid.
The prescribed limits for spectrum caps will be applicable to both licensees individually and the spectrum holding of each licensee will include 50% of the spectrum held by the other licensee.
The Spectrum Usage Charges (‘SUC’) levied on each of the licensees will be in- creased by 0.5% of the adjusted gross revenue.
The licensees who intend to share spectrum are required to intimate the DoT as regards sharing the right to use spectrum at least 45 days prior to the effective date of the sharing. The licensees are also required to give an undertaking to the DoT stating that they are in compliance with all the terms and conditions of the Spectrum Sharing Guidelines.
If it is determined at any later stage that either of the licensees is not in con- formity with the Spectrum Sharing Guidelines, then such sharing arrangement may be annulled.
ii. Spectrum Trading Guidelines
A summary of the key points of the Spectrum Trading Guidelines are given below:
All access spectrum bands that have been earmarked for access services will be treated as tradable spectrum bands. As provided for under the Spectrum Shar- ing Guidelines, spectrum trading will only be permitted between two access service providers holding CMTS, UASL, UL(AS) or UL with authorization of ac- cess service in an LSA.
Importantly, only the outright transfer of the right to use spectrum from the seller to the buyer is permitted and the mere leasing of spectrum is not permit- ted and such transfer will not alter the validity period of the spectrum that had been assigned originally.
The licensees are also required to intimate the DoT 45 days prior to the pro- posed date of trading and also provide an undertaking that they are in compli- ance with the Spectrum Trading Guidelines.
The acquirer of the spectrum is required to remain within the prescribed spectrum caps and the spectrum acquired will be counted towards the total spectrum holding of the acquirer. Furthermore, the spectrum acquired through such trading can only be sold after two years from the date of its acquisition.
A non-refundable transfer fee of 1% of the transaction amount or 1% of the market price, whichever is higher, will be imposed on all spectrum trade trans- actions. Also, the amount received from trading will be considered a part of the adjusted gross revenue for the purpose of levee of licensee fee and SUC.
For further information, please contact:
Zia Mody, Partner, AZB & Partners
zia.mody@azbpartners.com
