The Telecom Regulatory Authority of India?s (TRAI) guidelines on spectrum pricing, as part of its recommendations on the Auction of Spectrum continue to be debated by various industry factions.
Prior to this, the Telecom Commission had asked TRAI to analyse the potential impact of the 2G spectrum auction price it had proposed earlier.
As part of its recommendations on the auction of 2G spectrum, TRAI had recommended a base price of Rs 36.22 billion per megahertz (MHz) for pan-India spectrum in the 1800 MHz band. This figure is almost 10 times higher than the price at which 2G licences bundled with 4.4 MHz spectrum were allocated in 2008.
TRAI had also recommended that the price of spectrum in the 800 MHz and 900 MHz bands should be double the price of spectrum in the 1,800 MHz band.
However, the industry reacted very strongly to these recommendations. Thereafter, the Telecom Commission asked TRAI to review the impact of the high 2G spectrum reserve price on industry players. The Telecom Commission is of the view that a detailed analysis of the impact of the proposed auction price on call tariffs and carriers? investments is required, before it takes a final decision on the recommendations.
Now, in an attempt to create a level-playing field, the government is reportedly planning to ask operators to shell out an auction-discovered price for the 2G spectrum they currently hold for the remaining duration of their licences.
The Department of Telecommunications (DoT) will reportedly present this proposal to the Union Cabinet shortly. It is believed that if accepted, this proposal would mean that players like Bharti Airtel, Vodafone India, Idea Cellular, Reliance Communications and Tata Teleservices Limited may be required to pay the auction-determined price for the spectrum they hold in the 1800 MHz band. These companies will also be able to extend the validity of their licences by 20 years.
However, this is not applicable to the 2G spectrum held by incumbents in the 900 MHz band. In this case, these companies will have to shell out the auction-determined price for the remaining tenure of their licence. Spectrum in this band will be refarmed when mobile licences are renewed in 2014.
