Telecom Commission wants clarifications from Trai on low spectrum price

Why has telecom regulator Trai suggested that no spectrum be reserved for incumbents when refarming happens in the 900 mhz spectrum band? And why has no pan-India base price been calculated for 900 mhz band? These are some of the clarifications the Telecom Commission today sought from Trai. It has also sought the rationale for calculating the reserve price for 1800 mhz spectrum or 2G spectrum by Trai this time.

Last month, Trai had recommended about 37 percent cut in base price for 1800 Mhz band, compared to the reserve price in the last auction. This is the steepest price cut so far and telcos cheered this recommendation, indicating that the upcoming spectrum auction may not be as much of a damp squib as the two earlier ones. But now, TC wants to know what is the basis for Trai to arrive at such a low base price figure for 2G or 1800 mhz airwaves?

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For 900 Mhz, Trai had recommended a reduction of around 60 per cent but this prices was calculated for only three circles. The regulator had not recommended any price for 800 mhz band which is used for CDMA services and had also suggested that no spectrum be reserved for incumbents while refarming. So the TC wants to know a pan-India base price for 800 mhz airwaves and also wants to ask some uncomfortable questions on refarming.

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Refarming means incumbents will have to surrender all 900 mhz spectrum they currently hold and bid for either 900 mhz or 1800 mhz spectrum at current, higher prices. Bharti, Vodafone and Idea have 900 mhz spectrum which is twice as efficient as 1800 mhz spectrum and the incumbents have been uniformly opposed to any refarming at all.

But last year, an Empowered Group of Ministers had recommended that 2.5 mhz spectrum be kept reserved for players who are surrendering 900 mhz airwaves and they be given some priority in auctions. But the Trai recommendations last month have suggested no priority be accorded to these telcos and nor should any spectrum be reserved for them. This is what the Telecom Commission has questioned.

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So the TC, which is the highest decision making body of the Department of Telecom, is seek clarifications from Trai on spectrum pricing and also on the logic of levying uniform spectrum usage charge from April next year. TC, which is an inter-ministerial body, will take the final decision on October 29 and then the recommendations will be sent to the Empowered Group of Ministers.

“By and large, we have gone through all recommendations. On some we have sought clarifications and further views of Trai. But don’t think that (just because) we have sought clarification means that we have not agreed with Trai,” Telecom Secretary M F Farooqui said.

He said auctions should happen by January next year and that the Government should be able to meet its revenue generation target from spectrum auctions at Rs 11,343 crore.

The government has to conduct the third round of spectrum auction following a Supreme Court order in the 2G case where it said all the airwaves freed after cancellation of 122 licences in February 2012 should be auctioned. Auction for 900 mhz band also has to be conducted as some of the radiowaves in this band are held under old telecom licences which will start expiring from November 2014.