The Telecom Regulatory Authority of India (TRAI) on Tuesday suggested that in future, the price of 2G spectrum should be priced on a par with that of the 3G spectrum (which will be decided once the ongoing auction is over), besides favouring de-linking the sale of spectrum from issue of licence, as is being done now. It not only called for scrapping the government policy of subscriber-linked criteria for giving additional spectrum, but also favoured release of additional spectrum with fulfilment of roll-out obligations, which should be three years from the date of allocation of radio frequency.

Releasing its recommendations on ‘Spectrum management and licensing framework', TRAI has proposed that the licence fee paid by operators should be reduced in the next four years to a uniform 6 per cent of adjusted gross revenue from the current 6-10 per cent. To promote merger and acquisitions and help consolidation of the fast-growing telecom sector, the regulator has suggested ending restrictions that now prevent telecom firms from selling majority stakes in the first three years of getting a licence. It has also favoured sharing of 2G spectrum between operators for five years. Notably, the Department of Telecommunications has to accept these recommendations before they become a law.

“All the spectrum beyond 6.2 Mhz will have to be paid for at the current market price (achieved after 3G spectrum auction) by GSM operators, and for the CDMA operators, the spectrum assigned beyond the contracted amount of 5 Mhz will also have to be paid for,” said TRAI Chairman J. S. Sarma.

TRAI has also recommended that companies should not be given free spectrum when their licences come up for renewal, but pay market at rates based on 3G prices. TRAI expects to raise Rs.30,000-35,000 crore as one-time spectrum charges from mobile companies, if its recommendations are implemented.

Referring to 2G pricing controversy, Mr. Sarma also pointed out that auctioning 2G spectrum did not make economic sense, as the amount of spectrum after meeting the obligation of contracted spectrum was limited and the number of claimant for additional spectrum would have been extremely few. “We are conscious of the fact that there are several views about deriving the true price of 2G spectrum, and keeping this in view the authority is separately initiating an exercise to further study the subject and would apprise the government later,” he added.

TRAI has also proposed a cap of 10 Mhz spectrum per GSM operator and 7 Mhz to each CDMA company. However, it is not in favour of capping the number of companies per circle if licences are de-linked from spectrum. On spectrum allocation, Mr. Sarma said preference would be given to those who want to get the contracted 6.2 Mhz of spectrum and those who are waiting for the next level (8 Mhz of spectrum). The least priority is those who are waiting to get start-up spectrum. TRAI recommendations said the total requirement of spectrum in the next five years would be of the order of 500 to 800 MHz, including 275MHz for voice services alone, while the availability was only to the tune of about 287 to 450 MHz.

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