Design of Institutions for Spectrum Governance: Lessons from Spectrum Trading in India

Abstract

Introduction: Since more than 80% of data usage and Internet access happens over mobiles in emerging economies, effective spectrum regulation is very critical for them. To facilitate spectrum availability, many developing countries are attempting to transition from a command and control mode to a more open approach by adopting instruments such as spectrum auctions, leasing and trading. The institutional environment in emerging economies is in its nascent stage, and is characterized by poor formalization of processes, institutional voids, and inadequate human resource capabilities. In this situation, adoption of new and flexible instruments associated with open regimes often leads to ineffective outcomes and poor spectrum governance (Jain and Dara, 2017; Minervini, 2014). In order to study the constituents for good institutional design, we select a case study of spectrum trading in India. This involved an incumbent operator RCom (seller) and a new disruptive player RJio (buyer). Despite the urgency and necessity for RCom and RJio to remain solvent and plan aggressive growth respectively, the deal did not go through. Not only did RCOM and RJio have to contend with the sectoral regulatory framework (through the Department of Telecommunications, Telecom Regulatory Authority of India), the suo moto cognizance of this transaction by the Competition Commission of India, led to the involvement of various appellate bodies and the Supreme Court causing delays. Subsequently, a modified spectrum regulatory regime emerged. Objectives: Our objective is to develop the framework for an effective institutional design for spectrum regulation, including trading. While there are many studies that cover developed economies (Anker, 2017, Jain and Dara, 2017), these are unable to account for the complexities in developing economies adequately. Our objective is to fill this gap. Methodology: We adopt the single case study approach ( Yin, 2009) exploring the spectrum trade deal between RCom and RJio in the context of spectrum regulation from 1994/95 to 2018. We use detailed available data from secondary sources. We shall adopt the theoretical lens of regulatory spaces, institutional environment, and regulatory capacity. We contextualize our study with examples from spectrum trading in other countries (USA, UK). Expected Outcomes: This paper identifies the underlying constituent elements of a robust institutional design using the lens of regulatory spaces. The paper extends it to an environment characterized by institutional voids, poor design/scope of the regulatory agencies and inadequate mechanism for harnessing dispersed regulatory resources. We show how an appropriate institutional design in the context of developing countries could support the public policy objectives and ensure harmonization between flexibility in instruments and coherence in institutional design, a useful contribution for policy makers.