On Thursday, the government will take its first step towards finalising its views on the Telecom Regulatory Authority of India’s (Trai) recommendations on auctioning 2G spectrum, an issue which has split the telecom industry and the regulator down the middle.
The Telecom Commission ? an inter-ministerial panel of secretaries which is the highest policy-making body in the department of telecommunications (DoT) ? will meet to discuss and finalise its stand on Trai?s recommendations, mainly the astronomically high reserve price of R18,110 crore for auctioning spectrum in the 1,800 MHz band and re-farming valuable spectrum in the 900 MHz band, which is currently held by the country’s top three operators.
?The meeting of the commission will begin at 1:30 pm and we hope to finalise our views on most of the matters. Once the commission takes a final call on the recommendations, its views will be sent to the telecom minister for consideration. After this, the matter would be put before the empowered group of ministers for a final view,? R Chandrasekhar, secretary, department of telecommunications (DoT) and chairman, telecom commission, told FE.
The commission also has secretaries of finance, Planning Commission and the department of industrial policy and promotion as its members.
Once the commission finalises its recommendations and sends them to the empowered group of ministers, the latter will take the final call on all aspects and finalise dates and modalities of the bidding process. According to the Supreme Court, the government has to complete the auctions and grant new licences and spectrum by August 31.
Meanwhile, an internal DoT panel has already vetted the regulator’s recommendations and differed with it mainly on three important counts. First, it disagrees with the view that spectrum needs to be liberalised at this stage because it involves different entry timing of operators at different price points. In spectrum liberalisation, usage would be technology-agnostic, allowing operators to use 2G for 4G services and vice-versa. The second point where the panel has rejected the regulator’s view is reducing the reserve price of spectrum in the 800 MHz band (for CDMA services) to 1.3 times the base price of 1,800 MHz (for GSM services) rather than double of it which was originally suggested. The third and most important point is that the panel has revised upwards the Rs 18,110 crore reserve price for a block of 5 MHz spectrum in the1,800 MHz band by indexing it to the State Bank of India’s prime lending rate since 2010 when the 3G auctions were held and thus making it at Rs 21,225 crore.
The telecom industry has not only rejected Trai recommendations calling them faulty and illogical, something which would kill the industry and raise consumer tariffs, but also labelled them the worst regulatory practice in the last 16 years. Promoters and CEOs of the country’s top three operators ? Sunil Mittal of Bharti Airtel, Marten Pieters of Vodafone India and Kumar Mangalam Birla of Idea Cellular ? recently met senior ministers and officials, urging them to reject the Trai’s recommendations.
Even newer operators like Uninor and Sistema Shyam whose licences were cancelled by the Supreme Court in February have rejected the regulator’s recommendation because of the high reserve price and the auctions being open to incumbent operators, and have said that if they are accepted, they would exit India.