Spectrum price issue: TRAI returns clarifications sought by Telecom Commission without any change

india-telecom2014Telecom Regulatory Authority of India (TRAI) on Thursday returned the clarifications sought by the Telecom Commission and kept the base price of 3G spectrum unchanged at Rs 2,720 crore per megahertz stating all spectrum in 2100 MHz band. In its reply, TRAI said that it stands by its pricing of 3G spectrum at Rs 2,720 crore per megahertz and that it would be auctioned on February 25.

A week ago, the Telecom Commission had referred the regulator’s recommendations pertaining to the pricing of spectrum in the 2100 MHz band, for a review.
“DoT’s plans to auction only 5 MHz of 3G spectrum at a time when the defence forces have agreed to vacate an additional 15 MHz would lead to a sharp fall in sectoral investment, a deterioration in the quality of service and consumer difficulties,” according to TRAI.

On December 31, telecom regulator had recommended this rate for 3G spectrum which is about 19 percent lower compared to the price paid by service providers in the 2010 auction.

“In sum, the availability of 900 and 1800 MHz spectrum is not being increased. And, on top of this, the quantum of 2100 MHz spectrum is restricted. The end result of such an auction can only be what the authority sketched in its recommendations of October, 2014, namely, industrial distress, a sharp fall in sectoral investment, a deterioration in the quality of service and consumer difficulties (in terms of access and/or higher tariffs),” said TRAI in its response to DoT.
Reports said that the DoT may approach the cabinet on January 15 about the pricing of the 3G spectrum.

“There is a discernible pattern in the endeavour to drive up reserve prices (and auction realised prices) at which the 2100 MHz spectrum is sold. Leave aside the many aspects of pricing, the most telling is the reluctance to augment spectrum supply and create artificial scarcity. In no uncertain terms, the authority would like to caution against sacrificing the sector’s long-term interests at the altar of revenue realisation,” said regulator to to DoT.

The 3G spectrum in 2010 had attracted bids worth Rs 16,750.58 crore for a block of 5 Mhz frequencies on pan-India basis which amounts to about Rs 3,350 crore per Mhz. The recommended base price is about four times higher on per megahertz basis when compared to reserve price of Rs 3,500 crore for 5 Mhz fixed by the government for last 3G auction.

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