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Updated: April 23, 2012 20:57 IST

2G auction: TRAI proposal sets off fears of phone tariff hike

PTI
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A man talking on the mobile phone in Thiruvananthapuram. TRAI on Monday proposed a steep minimum price for auction of 2G telecom spectrum, setting off fears of a hike in mobile phone tariffs which are at present among the cheapest in the world. File photo
The Hindu A man talking on the mobile phone in Thiruvananthapuram. TRAI on Monday proposed a steep minimum price for auction of 2G telecom spectrum, setting off fears of a hike in mobile phone tariffs which are at present among the cheapest in the world. File photo

Telecom regulator TRAI on Monday proposed a steep minimum price for auction of 2G telecom spectrum, setting off fears of a hike in mobile phone tariffs which are at present among the cheapest in the world.

The regulator, whose recommendations are not binding on the government, valued 2G spectrum at about Rs 7 lakh crore, nearly seven times more than Rs 1.04 lakh crore that the government had received through auction of 3G spectrum in 2010.

The Telecom Regulatory Authority of India (TRAI) proposed a minimum or base price of Rs 3,622.18 crore for every mega Hertz of spectrum in the 1800 MHz band, where radio airwaves have been freed after the Supreme Court cancelled all mobile permits issued by the then Telecom Minister A Raja in 2008.

The price set is around 10 times more than what companies such as Unitech Wireless, Swan Telecom and Shyam Telecom paid for at least 4.4 MHz of all-India spectrum in 2008.

A pan-India spectrum in 1800 MHz band will cost Rs 18,000 crore. The reserve price is several times the base price of Rs 3,500 crore for 3G spectrum auction.

TRAI recommended that auction should be open to all companies except those having a more than prescribed limit of spectrum, potentially disqualifying incumbents like Airtel, Vodafone and BSNL.

Telecom operators were naturally not happy with the recommendations with some even mulling legal action on the grounds that the regulator had exceeded its brief.

Expressing concern at TRAI recommendation, Vodafone said, “We believe that several of these recommendations are retrograde and if accepted, will do irreparable harm to the industry.”

Deloitte Haskins & Sells said higher price for spectrum may ultimately lead to upward revision in tariffs.

KPMG said TRAI recommendations were “appropriate steps towards efficient utilisation of spectrum” but added that the high reserve price is likely to strain resources of bidders.

The reserve price for 800 MHz has been fixed at Rs 7,244 crore, TRAI said, adding that spectrum will be offered in blocks of 1.25 MHz, and at least 5 MHz will be offered in the auctions.

The auction is proposed to be open to all eligible companies holding spectrum below a prescribed cap.

Also, spectrum to be assigned through auction shall be liberalised -- that is spectrum in any band can be used for deploying any services in any technology.

TRAI said the reframing of spectrum in the 800 MHz and 900 MHz bands should be carried out progressively at an early date but not later than the due date of renewal of the licences.

Also, the spectrum available with service providers in the 900 MHz band should be replaced by spectrum in the 1800 MHz band, which should be charged at the price prevalent at the time of refarming.

The auction should be conducted using Simultaneous Multiple Round Auction (SMRA) format.

As regards the auction of spectrum in 1800 MHz and 800 MHz bands to be conducted immediately following these recommendations, TRAI has said that it should be held in single stage. Auction of 1800 MHz spectrum can be done in current 2012-13 fiscal itself.

“It (TRAI recommendations) will hamper the ability to connect the unconnected and goes against the objectives of National Telecom Policy of ensuring improved rural tele-density and right to broadband,” Vodafone said.

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I applaud the TRAI recommendation, which reflects the price of spectrum
more realistically. I don't think the price of communication should
increase too much because of this, as the companies with enough spectrum
already wouldn't be required to bid, and the new companies that acquire
spectrum would have a huge market in India to benefit from. Pay the
Government if you want to stay in the business.

from:  Gayathri
Posted on: May 31, 2012 at 18:30 IST

go by TRAI recommendation -
Charge the high amount -
put the cash in government treasury and not your cayman Islands account or swiss account.
Spend the money on public infrastructure, health education.
We dont mind paying a higher cost for cellphone - if it really would increase. I doubt that - its high market and low price will win!.

from:  sriram
Posted on: Apr 24, 2012 at 18:04 IST

These companies which have been neglected rural areas in last decades are shedding crocodile tears for rural tele-density. These companies still want telecom spectrum at throw away prices. People are waiting to see that the national asset like spectrum gets the best price.

from:  Arjun Indwar
Posted on: Apr 23, 2012 at 22:50 IST

Well, at least now there is a reasonable base for allocation and further refinement of bidding process. This is a good starting point for the sector but badly exposes the policy failures of the Government of the day. Let the public policy be shaped based on public interest and goods and not by the lobbyists! They always shed "crocodile tears" as if they are worried about the consumers' interest when actually their hidden agenda is maximising their profitby hook or crook. Public policy must be sanitised from corruption and free from lobbyists and paid consultants' bad influences.

from:  Dr C Kannapiran Economist
Posted on: Apr 23, 2012 at 22:37 IST

We should now hope that those players like Reliance GSM and Tata Docomo which did
not have adequate spectrum earlier are able to garner more spectrum and improve their services and network coverage, ultimately increasing competition and acting as a counterbalancing force against all these potentially inflationary recommendations.

from:  R R Kumar
Posted on: Apr 23, 2012 at 22:29 IST

Vodafone said, “We believe that several of these recommendations are retrograde and if accepted, will do irreparable harm to the industry.”
Seriously!! You have done irreparable harm to the Nation by bribing govt officials (on oath) to gain cheap licenses. Let's follow Swamy's lead and bring back the black money of these Congress Cheats from foreign banks; This "higher tariff to end user (cellphone user)" issue will be taken care of.

from:  Venkatesh Bhaskaran
Posted on: Apr 23, 2012 at 21:59 IST

This is a key issue that escaped the attention of pretty much everyone
crying for the government's blood after the 2G spectrum scam. The only
problem with the 2G scam was the clearly arbitrary, deliberate
subversion of the declared first come first server process of the
spectrum allocation to benefit certain specific parties. Not going for an auction was NOT a problem. An auction would have definitely fetched more revenues for the government, but it would have made communication MUCH more expensive for Indians. The first-come-first-serve policy cost the government a lot of direct income, however, it made communication much cheaper in India which definitely benefited its
citizens. (Plus the indirect revenues the government got as a result of increased communication - that's a whole different matter.) Auctioning of natural resources will ensure that government get higher prices, but it will also increase the price of the end products. Now communication is going to cost a lot more for us.

from:  Mithun
Posted on: Apr 23, 2012 at 21:25 IST

Paying lacs of crores in bribe to scions and inheritor of politics will not increase the cellular prices but paying right amount in auction will increase price? These guys need lessons from Siva G the boss.

from:  O Raja
Posted on: Apr 23, 2012 at 21:17 IST
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