TRAI recommends reducing base price for the upcoming auction by up to 60 per cent

The Telecom Regulatory Authority of India (TRAI) has recommended reducing the base price of the 2G spectrum by up to 60 per cent. The recommendations have come in the wake of the empowered group of ministers (EGoM) on telecom?s approaching TRAI for its views on the reserve price of spectrum to be auctioned in the 1,800 MHz, 900 MHz and 800 MHz bands.

The EGoM?s decision was necessitated with the government receiving lukewarm response to the last two rounds of 2G spectrum auction in the 18,00 MHz band.

TRAI has recommended reducing base price for 2G spectrum by 37 per cent on pan-India basis from Rs 23.79 billion to Rs 14.96 billion per MHZ on pan-India basis. The regulatory body has turned down incumbent GSM operators request to reserve at least 2.5 MHz of spectrum in the 900-MHz band and has significantly lowered the base price of spectrum in this band. TRAI has suggested a 60 per cent lower base price for 2G spectrum in the Mumbai, Delhi and the Kolkata circles. Licences of majority of the 2G service providers in the three circles are coming up for renewal over the next few months.

Earlier, the base price for 900-MHz spectrum had been fixed at twice the base price of spectrum in the 1,800-MHz band. However, the revised base price will be 20 per cent lower than that and 70 per cent less than the 3G spectrum auction price despite the fact that the 900 MHz band is three times more efficient than the 2,100-MHz band.

TRAI has recommended reducing the reserve price of spectrum in the Delhi circle by 54 per cent to Rs 1.75 billion, by 56 per cent to Rs 1.65 billion in the Mumbai circle and by 32 per cent to Rs 1.24 billion in the Karnataka circle.

Further, TRAI has also suggested that the operators should be asked to pay a flat spectrum usage charges (SUC) of three per cent of their gross revenue instead of the existing SUC charges which vary between two to eight per cent. The move is expected to benefit incumbent operators with more spectrum as they had to pay higher SUC charges. The regulatory body has also recommended that spectrum trading be allowed between operators, provided the spectrum being traded has been obtained through auction or the market value for the spectrum has been paid.