A committee of Department of Telecommunications? (DoT) members has asked the Telecom Regulatory Authority of India (TRAI) to reconsider the latter?s recommendation on spectrum pricing.
The DoT committee has rejected the telecom regulator?s proposal to reduce the reserve price for spectrum to be auctioned in the 1,800 MHz, 900 MHz and 800 MHz bands by 60 per cent. According to the committee, TRAI?s estimate does not reflect the value of the spectrum keeping in view the future growth potential and projections in the telecom sector. In a report submitted to the Telecom Commission, the committee said, ?For arriving at valuation of spectrum based on production function, TRAI has used base station cost for 2G services. Therefore, the present valuation does not appear to reflect the value of the liberalised spectrum as its potential for use is much more than 2G over next 20 years.?
The Telecom Commission will take a final decision on the matter. In case, the committee?s report is accepted then the next round of auction will get delayed because TRAI will have to review its spectrum pricing proposal. TRAI, in its recommendations, had proposed to reduce the reserve price from Rs 181.1 billion to Rs 74.8 billion for 5 MHz pan-India spectrum in the 1800 MHz band. The government was looking forward to conduct the auction in November 2013.
The DoT panel has also rejected TRAI?s recommendation to introduce a flat charge for using spectrum. While TRAI had stated that all operators should pay three per cent of their annual revenues for using the spectrum, the panel believes that this would go against the rules specified at the time of auctioning broadband spectrum in 2010. As regards to TRAI?s suggestion to allow spectrum trading, the DoT panel has said that this could create monopolies. It has further stated that TRAI should take a holistic view of the matter including provisions to check entry of non-serious players in the telecom industry.
The panel has also suggested that TRAI should re-examine its proposal regarding the use of 800 MHz band, which is currently being used by CDMA players. The regulator had earlier stated that the band should not be put up for auction but must be allocated to GSM service providers. However, as per the committee, the proposal is not feasible as it would require significant spectrum re-arrangement.
