Further cut in spectrum prices unlikely, say DoT sources

New Delhi: The Department of Telecom (DoT) may actually not recommend any further lowering of 1800 mhz spectrum base price, disappointing telcos who are pushing for price reduction. It has already made sure that telcos have no other option but to participate in the upcoming auctions, since it has refused to extend licenses of those operators who sought extension.

Now, if a telco whose license is expiring in any circle needs to continue operations, it must participate in auctions to win back spectrum.

[caption id=“attachment_681044” align=“alignleft” width=“380”] Sources in DoT said today there was a case for not recommending any further price reduction for spectrum. AFP[/caption]

Sources in DoT said today there was a case for not recommending any further price reduction for spectrum.

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“We have already done this twice, there is really no need to reduce spectrum prices again. The price of spectrun was fixed taking into account TRAI recommendations. And it is incorrect to say that people did not come forward to bid for spectrum in the November auctions since barring four circles, bids were received in most others. New telcos like even bid for 5 mhz of spectrum in some circles. But we are yet to take a final call on pricing, after which we will go the Empowered Group of Ministers with a view”.

These sources said if decision on pricing is taken in good time, all formalities should be completed quickly and auctions could be held in early July.

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The government’s attempt to sell spectrum failed for the second time in March this year when only one telecom company - Sistema Shyam for CDMA spectrum - participated in the auction process. There were no takers for GSM spectrum despite the Government slashing the base price by a third.

In November 2012 too, the Government had tried to sell spectrum but the auction got over in two days. GSM telco lobby COAI has been demanding a further reduction in the base price for 1800 Mhz.

COAI has suggested that the entire policy on spectrum sale be sent back to the telecom regulator for a comprehensive re-look.

When the March auction failed, telcos were hoping that either the Government would lower prices or agree to renew licenses till a decision on pricing is taken. Now, it seems they will have to be disappointed on both counts. Operators anyway have to pay a license renewal fee based on the final auction price.

The next round of auctions is also different in another respect: DoT is now bound by a Supreme Court order to put up all spectrum which was released when licenses were quashed of those telcos which failed to win back spectrum in the November auctions.

This follows cancellation of 122 licenses which the SC had ordered in February last year; some telcos were able to win back circles they had lost after this order but some others had to exit.