Sibal says to make radio spectrum pricing market-driven

The government will delink 2G spectrum that now comes free with telecom licences and make radio airwaves pricing market-driven, the telecoms minister said on Saturday.

The government announced the new policy in an apparent bid to make the world's fastest growing market for mobile phone services more transparent. The market has been hit by a $39 billion potential fraud in awarding of licences in 2008.

Kapil Sibal told reporters under the new policy companies' revenue sharing with the government would be uniform and firms would not be given any start-up spectrum any more.

Government would like to make a directional shift from past practice and bring in a fresh policy regarding spectrum, said Sibal, who was appointed in November after his predecessor resigned in the wake of allegations of irregularities.

In the future, the spectrum will not be bundled with licence ... Spectrum will be made available only through market-driven process.

We need to seriously consider the adoption of an auction process for allocation and pricing of (2G) spectrum beyond 6.2 mega hertz while ensuring that there is adequate competition in the auction process.

India's most recent telecoms policy was formed in 1999, when the sector was dominated by the state monopoly. At that time, few imagined the country would rapidly become the world's fastest growing market for mobile phone services.

Fifteen operators, including units of Vodafone, Telenor and Etisalat, serve more than 700 million users and add about 17 million more each month.

The cut-throat competition has brought down call rates to the cheapest in the world in India, and operators last year paid billions of dollars to the government for third-generation radio airwaves.

But the sector has been hit by several controversies, including a state auditor's report that India lost $39 billion in revenue due to irregularities in the grant of licences in 2008, a scandal that led to resignation of then Telecoms Minister Andimuthu Raja.

The scandal has also ompted the opposition to demand an investigation by a joint parliamentary committee, paralysing policymaking.

Investors are tracking the case as a reflection of India's business environment and cancelling licences could cast doubt on the reliability of government policy and contracts.