Used various methods to derive spectrum price: Rahul Khullar

Defending Trai’s move to cut the 900 MHzspectrum reserve price by 60 percent and 1800 MHz spectrum reserve price by 37 percent, the regulator’s chairman Rahul Khullar said the new spectrum price has been arrived at by using scientific methods and market information revealed in auctions.

Speaking exclusively to CNBC-TV18, Khullar said the question wasn’t as much about the method as much as the manner in which the problem was approached.

“The Trai was acutely conscious of the fact that two auctions had already been held and markets had already revealed their preference. If we had gone ahead and done exactly what we did before, the problem was not going to be solved,” he said.

Explaining the method of arriving at the new spectrum price, the Trai chairman said the authority came up with 5 to 6 different methods–econometric methods, cost production, production function, different types of models to give completely different valuations for spectrum inLicensed Shared Access (LSA).

“All we have done is that we have imparted scientific method and used market information as revealed in the auctions to derive prices,” he said.

When asked why the Trai did not use this method earlier, Khullar said that scientific method varies from time to time and his method is somewhat different from others.

“The truth of the matter is that how a telecom service provider (TSP) values spectrum from its individual perspective is not known to me. All the authority can do is try and make an objective assessment of these valuations and come up with an average. Now we can’t do all possible valuations because we will be doing it for another 20 years. Hence, we restricted it to number of methods we had in hand and that is why we came up with these numbers,” he said.

The Trai chairman said the valuation was derived from a different set of methods working bottom-up and then offered to stake holders asking for their feedback.

“If you don’t like the methods give us some other alternative. Nobody gave us an alternative which was workable,” he adds.

When asked about the 900 Mhz spectrum refarming,Khullar says that there was a huge outcry last year when 900 Mhz spectrum were priced at Rs 36,000 crore for 5 Mhz, but the ballgame has changed now.

“I think everybody has come around to understand that there will be no reservation in 900 Mhz and no reservation in 1800 Mhz. Which means you are a TSP operator sitting on 900 Mhz spectrum, that spectrum is up for grabs and you have to bid in the auction to get it. It is not yours by right, it is not yours by licence, it is not yours by law and it is not yours in perpetuity. Bid, obtain it and move on,” he said.

Khullar also defended the government’s move to cap advertising space on television channels to 12 minutes per hour.