TRAI sets high base price for 2G auction, operators cry foul
NEW DELHI THE Telecom Regulatory Authority of India (TRAI) on Monday recommended to the government a much higher base price for the 2G spectrum auction that will be open to all players.
TRAI recommended the reserve price for the 1800 MHz spectrum at Rs 3,622 crore and that for 900 MHz at Rs 7,244 crore. For 700 MHz, it set the price at Rs 14,000 crore. This translates into a reserve price of over Rs 18,100 crore for a block of 5 Mhz in 1800 Mhz band and also the minimum pan-India spectrum price at Rs 3,622.18 crore.
It said the auction method will be the simultaneous multiple round auction (SMRA) format used during the 3G auctions in 2010.
Communications Minister Kapil Sibal meanwhile said the empowered group of ministers (EGoM) will meet to decide on the auction.
The new reserve prices for spectrum varies from circle to circle, with Delhi and Mumbai having the highest reserve prices for the 1,800 Mhz band at Rs 717.26 crore and Rs 702.14 crore, respectively.
Telecom operators and sector analysts said the recommendation if accepted would raise costs for the players and eventually make mobile telephony more expensive for the subscribers.
Uninor said some of these recommendations would create “severe negative impact” on the industry. “It is up to the political leadership of India now to ensure that the gains of the past few years of affordable phone calls for India’s people are not undone.” “It will hamper the ability to connect the unconnected and goes against the objectives of National Telecom Policy of ensuring improved rural tele-density and right to broadband,” said Vodafone. The Cellular Operators Association of India (COAI) and the Association of Unified Telecom Service Providers of India (AUSPI) in a joint statement expressed shock at the recommendations and termed them as being arbitrary, regressive and inconsistent.
The regulator said though the auction would be open to all the players, including the incumbents and the new players, those firms which are holding spectrum beyond the prescribed cap should not be allowed.
A majority of operators in their responses to the consultation paper issued earlier during the year by the regulator had suggested the reserve price for 1800 MHz to be fixed for Rs 1,658 crore - the price charged for a pan-India 2G licence in 2008.
The regulator has been formulating a new spectrum policy in the wake of the February 2 Supreme Court order cancelling 122 telecom licences issued in 2008. The apex court had asked the affected firms to shut shop in four months. At the same time, the court had asked the government to re-distribute these licences to firms through an auction in the due time. TRAI said that all spectrum to be assigned through the auction process in future shall be liberalised which means spectrum in any band can be used for deploying any services in any technology.