ibnlive » Business

Feb 02, 2012 at 09:10pm IST

SC verdict on 2G: What it means for consumers

New Delhi: The Supreme Court on Thursday cancelled all the 122 licenses issued in 2008 during the 2G spectrum allocation. A fresh auction will be held within four months.

But what does it mean for the customers and the industry?

The verdict has come as a huge embarrassment to the government and a jolt to the telecom sector.

As many as 122 2G licenses cancelled in 22 circles across India – in a country of 900 million subscribers, it is less than 5 per cent.

However, the order affects most major telecom providers. The companies have four months to wind up operations. Consumers can use that period to switch operators using mobile number portability, though newer subscribers might face some inconvenience.

"One of the problems with the regulation currently is that no body who is been with the service provider less than 90 days can port. That is something we should be able to amend on in respect of these license which have been cancelled. Let us study the judgment. As I understand, the judgment has also given four months time for these people to continue to operate, even that amendment may not be necessary," said J S Sarma, chairman, TRAI.

For the telecom industry, it brings about a much needed consolidation. Older players like Airtel and Vodafone will gain. They're likely to be the ones to bid when 2G spectrum is put up for auction in four months. But subscribers could end up paying the price.

"There could be slight upward trend in prices now because the market is no longer hyper competitive as people use to say because there was just too much unhealthy competition which had led to certain kind of price crash which eventually would have come back to hurt consumers," said Mahesh Uppal, telecom analyst.

On the flip side, the Supreme Court judgment could pave the way for prolonged litigation, and a slowdown in policy making. This means another round of uncertainty for investors looking to put money into the world's second largest telecom market.

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