Telecom Comm ask Trai to rework spectrum proposals

New Delhi: The Telecom Commission (TC) has not only asked the Telecom Regulatory Authority of India (Trai) to suggest an alternate method of arriving at spectrum pricing, but also to provide a detailed explanation on how the regulator plans to offer “liberalised” spectrum in fresh auctions.

“Liberalised spectrum” refers to the right of companies allotted spectrum to use the available bandwidth for providing any kind of service - 2G, 3G, 4G or anything.[caption id=“attachment_299469” align=“alignleft” width=“380” caption=“Spectrum war. Reuters”]  [/caption]

Besides, the commission has also suggested that past experience in telecom does not favour deferred payments for spectrum, a key concession offered by Trai while recommending a high reserve price for fresh 2G auctions. According to documents reviewed by Firstpost, the Telecom Commission wants to know how Trai has arrived at “liberalised” spectrum without studying issues such as interference, requirement of guard band, etc, if multiple technologies are to be offered using the same spectrum band.

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The commission’s queries on liberalisation of spectrum assume significance since Trai chairman JS Sarma has been justifying the “high” reserve price recommended for fresh 2G spectrum auctions by saying that new spectrum would be technology agnostic, allowing far greater flexibility to operators over its usage, opening up multiple revenue generation possibilities.

Trai has recommended an auction base price of Rs 3,622 crore for every megahertz (Mhz) of nationwide spectrum in the 1,800 Mhz band, which is almost 10 times the price in the 2008 2G sale. In 2010, Trai set the base price for 3G auctions at Rs 3,500 crore for a

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pan-India licence.

Based on queries raised by the Department of Telecom (DoT), the commission wants to know if interference, guard bands and even the use of LTE (needed in 4G) and GSM technologies in adjacent slots in the 900 Mhz band by different service operators would not create problems.

“Preliminary studies show that there is a requirement of a guard band to ensure interference-free operation and co-existence of different types of technologies in adjoining slots. Hence, guard band requirement in case of mixed usage of technologies in the same band is needed to be taken into account while indicating the spectrum blocks available for auction,” the DoT noted.

Besides raising queries on spectrum liberalisation, the Telecom Commission has also asked Trai to look for an alternative approach for fixing spectrum reserve price. It has questioned Trai on the basis on which it has at the efficiency factor and other indicators of the reserve price “keeping in view the multiplication factor of 1.5 for 800/900 mhz bands prescribed by Trai in its recommendations of May 2010 and February 2011”.

The commission has also asked for an alternate approach to refarm spectrum so that large amounts of it are not kept unused despite high demand.

On the issue of deferred payments, too, the commission seems to have found fault with Trai. While the regulator has recommended that bidders pay 33 percent of the bid amount (in 1,800, 2,100 and 2,300 Mhz bands) initially and 25 percent of the bid amount for 700, 800 and 900 Mhz bands initially, the commission says the pre-1999 experience “does not favour deferred payment. Further, securitisation of installments over a 12-year period does not appear practicable”.

The Telecom Commission is the highest decision-making telecom body and Trai is expected to send in detailed replies to its multiple queries early next week.