A Department of Telecommunications’ internal committee has accepted the method suggested by the Telecom Regulatory Authority of India (TRAI) for calculating the price of 2G spectrum.
The committee has, however, rejected other proposals, including those pertaining to changing the norms related to roll out obligations; reducing licence fee to 6 per cent and making mergers and acquisition norms less stringent.
The committee’s views have been sent to the Telecom Commission, which is expected to meet on November 28, 2011, to discuss this subject.
TRAI had proposed to fix the price of all spectrum beyond 6.2 MHz at Rs 45.71 billion per Mhz. The DoT panel has accepted this suggestion and has said that the one-time fee will be calculated on a pro rata basis from May 27, 2008 until the remaining period of the licence.
The DoT panel has also accepted TRAI’s proposal to price spectrum in the 900 Mhz band 1.5 times higher.
However, the committee has not accepted TRAI’s proposal to impose a uniform licence fee of 6 per cent of the annual revenues. The panel has proposed a uniform fee of 8 per cent, which is lower than the 8.5 per cent suggested by an earlier committee.
Currently, operators pay between 6 per cent and 10 per cent of their annual revenues as licence fee and infrastructure providers do not pay any revenue share to the government.
On the issue of auctioning the 700 MHz band, the panel has accepted in principle to limit the auction to only those operators who do not have spectrum in the 800 Mhz or 900 Mhz band. However, DoT plans to take a final decision on this after TRAI submits its recommendations on spectrum re-farming.
The DoT panel has rejected TRAI’s proposal to set up a specific fund for financing spectrum re-farming. It has said that such a fund would be idle for a long time and hence the present practice of meeting costs from the consolidated fund of India should be continued.
On the issue of changing roll-out obligations from geography-based coverage to a population-based system, the DoT panel has said that it was not possible to change the norms now since most of the operators have already completed their roll-out obligation. It also said that there are several limitations in measuring the habitations, due to undefined boundaries in villages.
On the issue of mergers and acquisitions, the internal committee has rejected TRAI’s suggestion to permit mergers even if the combined market share of the entity goes up to 60 per cent. The panel has proposed making the norms more stringent, wherein no merger will be permitted if the market share goes above 35 per cent on grounds that anything above that could create a monopolistic situation.
However, the regulator?s suggestion to allow the merged entity to own up to 25 per cent of the spectrum available in a circle has been accepted.
