In response to the Telecom Regulatory Authority of India?s (TRAI) recommendations on the auction of spectrum, the Association of Universal Service Providers of India (AUSPI), which represents the CDMA players has stated that reserve price of Rs 36.22 billion per MHz of spectrum in 1800 MHz band will hurt the users significantly.
According to AUSPI, tariffs are likely to go up by 30 to 100 per cent in various circles. Besides TRAI?s justification of the high reserve price stating that the operators will be free to use the spectrum for 2G/3G/4G or any other technology doesn?t hold as the Indian market is not yet ready to embrace data and will continue to be voice centric with low Average Revenue Per Users (ARPUs).
AUSPI has therefore asked the government to keep in mind the flaws in the pricing model suggested by TRAI when making a considered decision on its recommendations. Any hypothetical service provider model will lead to a significant increase in customer tariff well beyond Re 0.28/minute and not Re 0.04/minute as mentioned in the recommendations made by the TRAI.
AUSPI, as calculated that the reserve Price for 1800 MHz spectrum should be fixed at the level of:
? The reserve price of 3G i.e., Rs 35 billion for 5 MHz; or
? The price paid in 2001 (Rs 16.50 billion) compounded at 12 per cent per annum to 2012, giving a value of Rs 57.40 billion for 5 MHz; or
? 3G bid reserve price of 2010 (Rs 35 billion), if compounded at 12 per cent per annum, giving a value of Rs 43.9 billion for 5 MHz.
Also the reserve price for 800 MHz CDMA spectrum should be fixed at the level of third of the 1800 MHz price in view of poor eco-system for this band. There should also be a separate and independent auction of 800 MHz.
On the issue of refarming of spectrum, AUSPI considers that refarming will be an important milestone in the development of the telecom industry as it will repurpose the spectrum for more advantageous and efficient usage. Having accepted the refarming of the 900 MHz spectrum in principle, the government should expeditiously act upon it or on expiry of the license.
Further, considering the reluctance of the financial institutions and the banks to provide financial support to telecom companies the government must provide flexible funding regime. For this, AUSPI states:
? Initial payment for spectrum acquisition for 1800 MHz may be kept at 15 per cent and for 800/900 MHz be kept at 10 per cent.
? The government may provide a moratorium for payment of spectrum acquisition of 4 to 5 years instead of 2 years as recommended by TRAI.
? The balance payment of auction price may kindly be allowed in 15 yearly installments.
? The rate of interest for auction price may be kept at par with that of 10-year government securities.
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On the rollout obligations, AUSPI states that once the full market value for spectrum has been realised by the government through an open market auction, there is no justification for any rollout obligations. Hence no rollout obligations should be specified and market forces should be allowed to determine the rollouts.
For all the GSM operators with 4.4 MHz spectrum, we request the government to make immediate administrative allotment of spectrum upto the contracted 6.2 MHz to those who are contractually eligible for it.
