Clearing the stand over 2 G spectrum, the Cabinet set base price at Rs 14,000 crore for airwaves in the much controversial coming spectrum auctions, a step towards opposing mobile phone companies’ demand of 80% reduction from the base price fixed by TRAI regulator.
“The Cabinet approved the reserve price of Rs 14,000 crore for 5 MHz pan India in 1800 MHz band. The Cabinet also approved the recommendation of Empowered Group of Ministers for reserve price for 800 MHz band at 1.3 times that of 1800 MHz band. This translates into Rs 18,200 crore for pan-India spectrum, “ Union Telecom Minister Kapil Sibal told reporters.
Now, the mobile companies use an 1800 MHz band at base price of Rs 2,800 crore for every MHz on the GSM platform, while CDMA-based operators use 800 MHz band.
3-8% of telcos annual revenues will have used as SUC (spectrum usage charges) as per recommendations of panel of minister EGoM, approved by Cabinet.
Much disappointing and criticizing Cabinet decision, the existing major telecom companies such as Bharti Airtel, Vodafone, Idea Cellular, warned that higher base price would hit the industry structure and also the tariff for customers upto by Rs 30 paise per minute.
The telcos has only one option to accept this and carried forward burden to customers in from of higher tariff.
“This is unreasonably high and will adversely impact the health of the industry, which is already going through a bad patch. It goes against the government’s objective of affordable mobile services and undo all the good work telcos have done over the last decade,” Bharti Airtel’s India and South Asia CEO, Sanjay Kapoor, told reporters.
Existing slab rate system for Spectrum Usage Charges (SUC) are fair as per Industry norms and protection along with maximum government returns, recommended by EGoM on spectrum headed by Finance Minister P Chidambaram.
Waiting is for appointment of auctioneer by the Department of Telecom to process the 2G spectrum auction.