The panel agreed in-principle to allow the mortgage of spectrum, but did not provide clarity on implementation.
It also agreed to revise the timeline for the spectrum auction, and stated that banks will be able to auction airwaves only in the presence of the department of telecommunications.
Decisions on issues such as pricing and roll-out obligations are expected to be taken in future meetings, sources told NDTV. The panel is next expected to meet on Monday.
This was the first meeting of the panel with Home Minister P. Chidambaram as chairman. He was asked to step in after Agriculture Minister Sharad Pawar opted out citing fear of controversy. The BJP has immediately cried foul alleging a conflict of interest—the main opposition party accuses Mr Chidambaram of having played a role in the 2G scam that Mr. Raja allegedly scripted to give away precious spectrum at throwaway prices to ineligible companies.
The issues being discussed by the group are complicated and will have deep impact on both consumers and industry. On most issues the ministerial group’s decision will be final, but the cabinet will take a final call on the auction price and a one-time fee for existing telcos.
An as-is implementation of sector regulator Telecom Regulatory Authority of India’s recommendations will mean a 5-10 paise hike in mobile tariffs.
The ministers have to consider big differences between the proposals of the TRAI and the industry’s take and expectations. There are gaps in the information provided from both sides. While TRAI sees a 5-10 paisa per minute increase in tariffs on account of a reserve price of Rs.18,348 crore for 4.4 MHz of spectrum, the industry says such reserve pricing will push up tariff by up to a Re 1 per minute depending on the circle and the amount of spectrum allocated.
Eye on the clock, the panel will have to approve a new timeline for the 2G auction process as well. There are less than 50 court-allotted days left and it seems difficult now for the government to conduct an auction by August 31, the Supreme Court’s deadline.
The selection of an auctioneer will now be completed only by July 20 instead of the earlier scheduled date of July 5. In a cascade effect, a letter of intent will then be issued only by July 26 instead of the earlier target date of July 10. And this will mean that an information memorandum detailing the auction guidelines will only be issued on August 22 instead of August 6, making it impossible for the government to meet the Supreme Court deadline.