Wednesday, December 22, 2010

The 2G Debate

Government sold 2G licenses at very low prices causing huge losses. These licenses are valid for 20 years. Why 20 years? Why not give licenses per year? Why not per month? And why license?

How about government implementing a gateway which could allot spectrum dynamically with say few seconds of granularity, with rates that are based on congestion rates at any time of the day. Basically any telecom provider can get as much spectrum as he needs, programmatically, at granularity of few seconds within few milliseconds. It is not impossible to build such a system and with fraction of the cost at which the spectrum was sold and would give maximum flexibility to all operators so that they only pay for what they use and gives government maximum money because rates can be changed by government as and when appropriate.

This would be a great system to maximize government revenue and offers maximum flexibility to every operator. Chances are this will never be built. How will operators make money and how will politicians make money in that case.  See Non-Markets.