Telecom ministry panel wants to put Trai on hold

Written by fe Bureau | New Delhi | Updated: Oct 2 2013, 09:05am hrs
If the Trais recommendations on slashing the base prices by 60% for auctions in the 1,800 MHz and 900 MHz bands offered hope for the beleaguered industry, the telecom ministry has all but scuttled the plan. A nine-member technical committee in the telecom ministry has opined against the major Trai recommendations. The report of this committee, headed by the DoTs member technology, has been sent to the Telecom Commission, which will consider the recommendations on Thursday.

If the Telecom Commission rejects the Trai recommendations, the move will also play havoc with the finance ministrys budget calculations which include R20,000 crore to be got from fresh spectrum auctions. Apart from the telecom secretary, the Telecom Commission also includes the finance secretary, DIPP secretary and the member secretary Planning Commission.

The most important Trai recommendation pertains to the 1,800 MHz spectrum where, in May 2010, the Trai (under an earlier chief) had put a base price of R18,000 crore for 5MHz of spectrum in April 2012. While this was lowered to R14,000 crore by the group of ministers, the base price was still too high, as a result of which the November 2012 auction failed. After this, the base price was lowered by another R2,000 crore but this didnt help either. In comparison, the Trai has now recommended a base price of R7,480 crore for a pan-India 5 MHz spectrum slot.

The DoT panel has said that this price doesnt seem to take into account the growth potential in the sector and so should be reviewed.

While the 1,800 MHz price is critical for telecom players looking for new spectrum in the 2G space as well as to fix the price of the extra spectrum they hold, the 900 MHz spectrum is even more critical for 3G telecom. Trai had recommended a price of R288 crore per MHz for the Delhi circle and R262 crore for the Mumbai circle. Since Trai had recommended that existing telcos will not be allowed to retain any of their 900 MHz spectrum, rational pricing here is critical the 2010 Trai original recommendations were for R800 crore in Delhi.

The committee, similarly, is not convinced about Trais recommendation of a flat 3% spectrum charge in case spectrum is bought through an auction. Given that the existing spectrum charges are based on a slab-basis right now, the Trai move makes sense most of the current spectrum allocation was not based on market prices, so a higher spectrum charge makes sense. But when auction prices are paid, just an administration charge is good enough.