In India, the Department of Telecommunications (DoT) conducts auctions of licenses for electromagnetic spectrum. India was among the early adopters of spectrum auctions beginning auctions in 1994.
Overview A telecom company that wishes to offer services in any of the 22 telecom circles in India must purchase a Unified Access Services (UAS) license to operate that circle. Licences are awarded by auctions. The UAS, introduced in November 2003, is valid for a period of 20 years, which can be extended by an additional 10 years once per licence per circle. Initially, a mobile network operator that was awarded a licence to operate in any of the 22 telecom circles in India was allocated frequencies in that circle for a fixed time period. After the expiry of the license, the company would have to bid to renew the licence. A new telecom policy announced by the government in 2011, delinked spectrum from licences. As a result, when an operator renews its licence it must also pay separately for spectrum. The first telecom spectrum auction in India was held in 1994. Auctions were held again in 1997, 2000, and 2001. Spectrum in the 900 MHz band was auctioned in all these years except 2001, while 1800 MHz band spectrum was auctioned for the first time in 2001. Following the 2001 auction, the government abandoned the practice of auctions in favour of an administrative allocation model. Under this model, the government would select companies that it deemed were best equipped to develop India's telecom infrastructure. The final allocation of 900 MHz took place in 2004, through the new model. This policy resulted in spectrum being allocated at far lower prices than had been done through auctions. For example, Reliance had paid ₹ 12.25 crore and ₹ 58.49 crore in 1995 for 4.4 MHz spectrum in West Bengal and Orissa respectively. In 2004, Airtel was allocated the same amount of spectrum in the same circles for ₹ 1 crore and ₹ 4.4 crore respectively.
In 2008, 122 new 2G UAS licenses were granted to telecom companies on a first-come, first-served basis at the 2001 price. According to the Central Bureau of Investigation (CBI) charge sheet, several laws were violated and bribes paid to favour certain firms in granting 2G spectrum licenses. According to a CAG audit, licenses were granted to ineligible corporations, those with no experience in the telecom sector (such as Unitech and Swan Telecom) and those who had concealed relevant information. The Indian National Congress coalition government undercharged mobile telephone companies for frequency allocation licenses, which they then used to create 2G spectrum subscriptions for cell phones. The difference between the money collected and that mandated to be collected was estimated by the Comptroller and Auditor General of India at ₹1.76 trillion (US$18 billion), based on 2010 3G and BWA spectrum-auction prices. In a chargesheet filed on 2 April 2011 by the CBI, the loss was pegged at ₹309,845.5 million (US$3.2 billion). On 2 February 2012, the Supreme Court of India ruled on a public interest litigation (PIL) related to the 2G spectrum case. The court declared the allotment of spectrum "unconstitutional and arbitrary", cancelling the 122 licenses issued in 2008 under A. Raja (Minister of Communications & IT from 2007 to 2009), the primary official accused. The court found that Raja "wanted to favour some companies at the cost of the public exchequer" and "virtually gifted away important national asset[s]." On 3 August 2012, after a Supreme Court directive, the Government of India revised the base price for 5-MHz 2G spectrum auctions to ₹140 billion (US$1.5 billion), raising its value to about ₹28 billion (US$290 million) per MHz (near the Comptroller and Auditor General estimate of ₹33.5 billion (US$350 million) per MHz).
1994 auction The first auction was held in 1994. The government divided the country into 23 telecom circles and awarded licences and spectrum to two operators per circle. In the four metro circles - Chennai, Delhi, Kolkata and Mumbai - the DoT fixed several prerequisites for potential bidders to meet in order to be eligible for the auction. The criteria included financial resources, reliability, and investment in research, as well as specific details such as rate of network rollout, pricing, quality, and competitiveness.
1995 auction The licences and spectrum for the remaining 19 telecom circles was auctioned and allocated in 1995. In these circles, the government required that all potential bidders must have foreign partner in order to be eligible. The government proceeded on the assumption that no Indian company, at the time, had the financial resources and technical knowledge to provide large scale mobile services. Two blocks of 4.4 MHz from the 900 MHz band for GSM-based mobile services were auctioned in the 19 non-metro circles. However, the process exposed unforeseen problems with the design and rules of the auction. For instance, Koshika Telecom (operating under the brand name Usha Fone) was awarded multiple licences even though the licence fee was $15 billion while Koshika only had an annual turnover of $60 million. Concerns were also raised about the possibility of a monopoly if a single company secured multiple licences. In order to address this concern, the auction rules were altered to prohibit a single company from operating in more than 3 circles. The auction for the 900 MHz band was held again under the new rules.
1997 and 2000 auctions Spectrum auctions were held again in 1997 and 2000. In 1997, state-owned MTNL was allocated 4.4 MHz of 900 MHz band spectrum to commence GSM services. Another state-owned operator BSNL was awarded spectrum in 2000.
2001 auction The 2001 auction was the first time spectrum in a band other than 900 MHz was auctioned in India. The government auctioned spectrum in the 1800 MHz band using a three-stage auction process.
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