The Cellular Operators Association of India (COAI) has termed the Empowered Group of Ministers? (EGoM) proposal of keeping reserve price in the range of Rs 140 billion and 150 billion and spectrum usage charges either at five per cent or between three per cent to six percent discriminatory.
COAI says, ?EGoM has not given due consideration to the fundamental issue of unsustainable high reserve prices which will significantly increase costs, thereby invariably increasing the tariffs. This is a fact whereby industry has made representations and submitted the cost calculations which have even been seconded by independent analysts and the investor community.?
According to COAI, by changing the payment model to high upfront charges coupled with even higher spectrum usage charges only aggravates the problem. It is pertinent to note that internationally where the spectrum has been allocated through the auction process, is fixed at a nominal rate not exceeding 1%. It is imposed only to recover the administrative costs associated with managing spectrum. COAI states that this is going to adversely impact rural penetration as rural rollout will become increasingly unviable and unsustainable.
As per the COAI, the discrimination between GSM and CDMA is being further widened by keeping the auction reserve price for 800 MHz at 1.3 times of 1800 MHz on the rationale that less than 5MHz is being put up for auction. A similar option is not being extended to GSM operators to retain their 900 MHz spectrum at a price of 1.3 times of 1800 MHz, in the event that less than 5MHz is obtained at the time of the licence extension.
It observes that although the Industry supports deferred payments for spectrum, the requirement for 25 per cent of upfront payment for CDMA and 35 per cent of upfront payment for GSM is yet another blatant example of discrimination, defeating the objective of creating a level playing field among the operators. It states that the proposal for a one time spectrum fee beyond zero or 4.4(GSM)/2.5(CDMA) or 6.2(GSM)/5(CDMA) is laden with legal infirmities besides being discriminatory against pure-GSM players as also contradictory to stated policy objectives of the Government. COAI believes that many of these recommendations will perpetuate the inequities between pure-GSM and dual-technology players thereby eroding the playing field even further.
