The Telecom Regulatory Authority of India (TRAI) may recommend a one-time fee ranging from Rs 509.8 million to a maximum of Rs 7.07 billion for every unit of 2G spectrum beyond the 6.4 MHz limit held by operators, according to news reports. TRAI may recommend that 2G spectrum in Uttar Pradesh (East) be priced the highest at Rs 7.07.billion, as this region holds the maximum potential for future growth, while spectrum in Jammu and Kashmir be charged the least.
Currently, these companies have been given only 4.4 MHz of start-up spectrum in most circles. If the regulator?s draft pricing formula were to be considered, companies such as Taa Teleservices Limited and Reliance Communications may have to pay about Rs 150 billion each for pan-India spectrum, to take their total holdings to the 6.2 MHz. These companies have been vigorously arguing that that mobile permits entitle them to a minimum of 6.2 MHz of spectrum and only allocations beyond this amount can be linked to a market linked pricing mechanism.
Also, under the new pricing methodology, since incumbent GSM operators largely have airwaves beyond the 6.2 MHz mark in the metros and category A circles, their outgo is set to be lower. This is because the regulator is of the view that incremental 2G spectrum is less valuable in the metros , more valuable in category A regions and most valuable in category B areas. In parts designated as Category C regions, TRAI has said that the incremental 2G spectrum beyond the 6.2 MHz would be about 2.4 times the cost of 3G airwaves.
