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What are the spectrum auctions?

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What are the spectrum auctions?


Context:

The Department of Telecommunications (DoT), recently said that auctions for 4G spectrum will begin from March 1.

The main objectives of the sale were:

  • To obtain a market-determined price for the spectrum on offer,
  • Ensure efficient use of spectrum and avoid hoarding,
  • Stimulate competition in the sector and maximise revenue proceeds.

What are spectrum auctions?

A spectrum auction is a process whereby a government uses an auction system to sell the rights to transmit signals over specific bands of the electromagnetic spectrum and to assign scarce spectrum resources.

Spectrum auctions in India

Devices such as cellphones and wireline telephones require signals to connect from one end to another. These signals are carried on airwaves, which must be sent at designated frequencies to avoid any kind of interference.

  • The Union government owns all the publicly available assets within the geographical boundaries of the country, which also include airwaves.
  • With the expansion in the number of cellphone, wireline telephone and internet users, the need to provide more space for the signals arises from time to time.
  • To sell these assets to companies willing to set up the required infrastructure to transport these waves from one end to another, the central government through the DoT auctions these airwaves from time to time.
  • These airwaves are called spectrum, which is subdivided into bands which have varying frequencies.
  • All these airwaves are sold for a certain period of time, after which their validity lapses, which is generally set at 20 years.

spectrum_auction

The likely bidder for the spectrum

All three private telecom players, Reliance Jio Infocomm, Bharti Airtel, and Vi are eligible contenders to buy additional spectrum to support the number of users on their network.

  • Apart from these three, new companies, including foreign companies, are also eligible to bid for the airwaves.
  • Foreign companies, however, will have to either set up a branch in India and register as an Indian company, or tie up with an Indian company to be able to retain the airwaves after winning them.

InstaLinks:

Prelims Link:

  1. What are spectrum auctions?
  2. Objectives of the sale.
  3. Need for a new spectrum auction
  4. Who can participate in auction?

Mains Link:

Spectrum auction in India has turned into a buyer’s market. Discuss.

Source: Indian Express