A Department of Telecommunications committee has asked the Telecom Regulatory Authority of India to reconsider the lower reserve price it has fixed for both 900-MHz and 1,800-MHz spectrum to be auctioned in January next year.
Hinting that the price could be higher, it has pointed out that the Trai calculation “does not appear to reflect the value of liberalised spectrum as its potential for use is much more than 2G over the next 20 years” and asked whether Trai has taken into account “the future growth potential in the telecom sector”.
The move will impact GSM operators who have been clamouring for a further reduction in the base price of this spectrum, saying it is still too expensive at 80 per cent of its actual value.
The Trai had recommended a reduction in the base price of 1,800-MHz spectrum by 37 per cent to Rs 1,496 crore (Rs 14.96 billion) per MHz pan-India and up to 60 per cent in the case of 900 MHz in the circles of Delhi (at Rs 288 crore or Rs 2.88 billion), Mumbai (at Rs 262 crore or Rs 2.62 billion) and Kolkata (at Rs 100 crore or Rs 1 billion) which will come up for auction next year.
The report was submitted by the committee to the Telecom Commission, which will meet on October 3, when the moves reversed by the committee will be referred back to the Trai.
The regulator has the power to make changes or not.
The final call has to be taken by the Telecom Commission and then by an empowered group of ministers.
The committee has also rejected two key recommendations of the Trai.
One was to impose uniform spectrum usage charges of 3 per cent of revenue on all auctioned spectrum.
Arguing that it cannot be implemented since revenues from auctioned and non-auctioned spectrum cannot be segregated, the committee has proposed the issue can be examined only when all the operators hold liberalised spectrum.
Secondly, it has said the regulator's recommendation to adopt an extended GSM band and bring it for auction is not feasible. Both these moves would have been a bonanza for GSM operators.
Incumbent operators like Airtel, Vodafone, Idea, BSNL and MTNL, who have more spectrum with them, were paying spectrum usage charges of up to 8 per cent, which would have come down.
However, it will be good news for Reliance Jio which had opposed the move saying that it would have to pay more as its spectrum usage charge for broadband wireless access spectrum currently is pegged at 1 per cent of revenue.
In a relief to CDMA operators like Sistema Shyam Teleservices and Tata Teleservices, however, the committee while rejecting the Trai recommendation that would have scuttled their growth path in the future has asked the regulator to give its recommendation on the reserve price and block size of 800 MHz so that it can be auctioned with 900 and 1,800 MHz. CDMA operators had protested against the move before Communications Minister Kapil Sibal.
In another setback to incumbent GSM players , the committee has accepted the regulator's recommendation that there not be any reservation of spectrum in the 900-MHz band.
Incumbent GSM operators like Vodafone, Airtel and Loop have been demanding that the government reserve at least 5 MHz of spectrum each for the two operators in Delhi, Mumbai and Kolkata during the auction next year.
Responding to the report, Rajan Matthew, director general of Cellular Operators Association of India, said, “It looks like a complete reversal of what the Trai has done and which was welcomed by the industry.
Most of the concerns raised by the committee have already been addressed by the Trai. So now we have to wait and watch as to what they do”.