Following the Telecom Regulatory Authority of India's (TRAI) recommendations on spectrum pricing, mobile operators, on Tuesday, warned that tariffs could double in some telecom circles if the government accepted these suggestions.
Heads of leading mobile companies, including Bharti Airtel, Vodafone, Idea Cellular, Uninor, Sistema Shyam Teleservices, Reliance Communications and Tata Teleservices, who met Communications and IT Minister Kapil Sibal in this regard, told journalists that the TRAI recommendations, if implemented, would have serious implications on the telecom sector, where the average revenue per user (ARPU) was declining.
“There will be circles which will have more than a 100 per cent price rise (in tariffs) if they were to absorb the impact of what is being recommended…In one circle, the cost of spectrum, the reserve price is Rs.7 crore and, on other end, there are metros where it is Rs.717 crore, which is 100 times differential,” said Bharti Airtel CEO Sanjay Kapoor.
TRAI has recommended a base price of Rs.3,622 crore per megahertz (MHz) pan-India spectrum, which is almost 10 times higher than the price at which 2G licences bundled with 4.4 MHz spectrum were controversially allocated in 2008 by then Telecom Minister A. Raja.
Mr. Kapoor said, “As the prices rise, the consumption goes down…and it has been absolutely assumed (by TRAI) as if the consumption will remain constant, which is not correct. There is a 30-paise per minute impact and not 2 paise as TRAI has assumed.” The regulator had taken into consideration only 576 Mhz in the 1800 Mhz band for calculations, whereas in reality 1167.40 Mhz of spectrum was at play, he added.