TRAI keeps high spectrum cost, single auction for all

In yet, big controversial fact in telecom sector is of Telecom Regulatory Authority of India [TRAI] proposed spectrum auction related reserve price issue.

From all corners, a huge pressure come up to TRAI regulator, but being stand with its recommendation of high base price, TRAI on Sunday agreed to gave relief in the reserve price of CDMA spectrum, not for GSM.

Proposing concession to telecom operators over CDMA spectrum’s reserved price in the 800 Mhz frequency band to 1.3 times the 1800 MHz band reserve price, now a telecom operator have to pay Rs 23,530 crore instead of around Rs 36,200 crore in bidding of spectrum.

Clarifying that this relief will only be for those states where airwaves less than 5 MHz are available for auction, the regulator said, “The Authority would be open to the Government fixing the Reserve price of 800 MHz spectrum at 1.3 times the 1800 MHz reserve price. This is only where 5 MHz spectrum is not being made available.”

This move will be significant for CDMA spectrum-holders Reliance Communications, Tata Teleservices and Sistema Shyam as TRAI also increased the spectrum usage charge from 1 %to 3% of the telcos’ gross revenues, in wake to hike savings with “37% payment of the total amount of the renewal fees by the entire industry”.

Maintaining single auction for all, TRAI strongly rejected for making any change in it’s reserve price recommendation for GSM that is of 3,622 crore per unit pan-India spectrum for 1800 Mhz band, along with re-farming the 900MHz and 800MHz bands those price has double the price of 1,800 Mhz.

According to source report, 900 Mhz spectrum is cost-effective for 2G services and all existing operators of GSM players, mainly Bharti Airtel, BSNL, Vodafone and Idea Cellular, presently using this service.

If regulator’s refarming is approved, and then they will all again in bidding in the upcoming 2G auctions via high spectrum 1800 Mhz band with low frequencies, this would cost them a lot, that’s why they said to hike tariff up to 100 per cent over existing rates.

Beside this, replying to DoT on impact of telecom tariff through Spectrum auction proposals, TRAI claimed that there would be no “adversely impact over the profitability of the wireless industry or the entry of new operators” , while adding that the impact on call tariffs for customers would be 4 paise per minute or lower.

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