Reprieve for Bharti, Voda on 'refarming' spectrum likely

New Delhi: There is some hope for players like Bharti, Vodafone and Idea on the issue of ‘refarming’ spectrum. Though the government is not abandoning plans to take away the more efficient 900 and 800 Mhz bands from incumbent operators and ask them to pay afresh for getting the less efficient 1,800 Mhz spectrum in return, the modalities of this refarming may be better than what the Telecom Regulatory Authority of India (Trai) has proposed.

Telecom Secretary R Chandrasekhar told Firstpost on Monday that the Telecom Commission has sought several clarifications from Trai on how this refarming should be done. The commission met to discuss proposals made by Trai on spectrum auction and decided to seek several clarifications from the authority.

“There are issues on whether all spectrum needed for the entire set of operators needs to be set aside from now onwards. We want to know if there is any way of optimising the process. Should refarming be done progressively? If we are doing it on the expiry of each licence, why set aside spectrum now? This would mean a lot of spectrum is idle for a long time. We are seeking clarity on these issues from Trai”.

He said there was no question of rethinking on the principle of ‘refarming’ spectrum, only the modalities are being assessed. As per Trai’s recommendation, existing GSM service providers using the 900Mhz band to provide 2G services are proposed to be shifted to the 1,800 Mhz band for providing the same services, without a choice. The telcos have made loud protests on this proposal, saying refarming would mean loss of connectivity to rural areas and unnecessary investments in migration from 900 Mhz to 1,800 Mhz bands.

Separately, Trai Chairman JS Sarma said it was normal for the Telecom Commission to raise queries on a host of the regulator’s recommendations and nothing should be read into these queries till Trai has had a chance to examine them. He also said that refarming was already approved in principle by the government.

Meanwhile, Chandrasekhar also said that the Telecom Commission has sought clarifications on the assumptions Trai has made while calculating the base price for 2G auctions. Trai has recommended that the reserve price for auction of spectrum this time should be at 1.08 times the 3G auction price of 2010, prompting every telecom operator to slam such a high base price.

Chandrasekhar said “we have sought clarifications from Trai on what assumptions it has made while recommending that the 2G auction price be an extrapolation of the 3G price. We also want to know the assumptions the Authority has used to arrive at the impact on tariff and penetration of mobile telephony after the new base price is used for fresh auctions”. While Trai’s Sarma has said that the impact of the higher auction base price would not be more than 2 paise per minute, operators have projected 25-30 percent tariff hikes because of the pricing math of Trai.

They have also noted that such a high base price would hamper connectivity and penetration into rural areas.

The DoT secretary further said that clarifications have also been sought from Trai on why only 5 Mhz of spectrum should be auctioned this year.“We want to know what is the rationale for auctioning just one block of spectrum if more is available.”

Sarma had earlier told Firstpost that only 5 Mhz is being auctioned now so that the authority could determine the actual market price of spectrum. He had also said that the second round of auctions could be done in early 2013-14 to enable more players to participate in the process.