Govt to decide first on 2G, dial Trai on other aspects

Written by Rishi Raj | New Delhi | Updated: May 15 2012, 09:19am hrs
Rahul KhullarRahul Khullar took over as Trai chairman on Monday
The government has worked out a strategy to defuse the crisis in the telecom sector triggered by the recent recommendations of the Telecom Regulatory Authority of India (Trai). Official sources said there is a near-consensus that the government should look at different aspects of the recommendations separately and act on the most urgent ones first.

As per the Supreme Court order on April 24, auction of 2G spectrum in the 1,800 MHz band must be completed by August 31. Hence, the government, for now, will focus only on this aspect of Trais recommendations. Suggestions on refarming 800/900 MHz spectrum, auctioning 4G spectrum and liberalising spectrum will be dealt with separately. On these aspects, the government will seek fresh recommendations from Trai headed by its new chairman Rahul Khullar. Since there is no court deadline to decide on these aspects, action on that front can wait.

Delinking auction of 1,800 MHz spectrum from other aspects is necessary as the government does not have enough time to go into all aspects now. Further, on the future road map of the sector, the new chairman needs to be consulted. It is a practice in the government that 15 days before relinquishing office, an officer does not initiate anything new, an official involved in the consultation process told FE.

As part of its immediate focus on 2G spectrum, the government will decide on the reserve price and number of spectrum blocks to be auctioned. If any of the cancelled licensees are able to get spectrum through auctions, the government would have managed to resolve the crisis. For incumbent operators, the Trai proposal to refarm spectrum in the 800/900 MHz band is of greater concern than 2G auctions. Operators like Bharti, Vodafone and Idea Cellular hold spectrum in this band, which is considered more efficient. Taking this away from them as the Trai has recommended and giving them 1,800 MHz band in lieu of it would require expensive network redesign. Thus, by referring the larger issues back to the regulator, the government will not get into a head-on confrontation with the industry and also involve the new chairman in the future course of the telecom sector, officials said.

Trai on Sunday reiterated its stand on most of the issues dealt in its April 23 recommendations, which have come under heavy fire. Now, the telecom commission will make its final recommendations, which will go to an empowered group of ministers led by finance minister Pranab Mukherjee, which will set the final reserve price and auction modalities.

Since the department of telecommunications has already sought Trai's reference in the form of a clarification, no more reference would be made to it. However, officials said if Khullar is keen to offer some inputs, it would be welcomed by the government.

Trai has recommended a reserve price of Rs 18,110 crore for 5 MHz spectrum in the 1,800 MHz band. Further, it wants that the spectrum in 900 MHz band be taken away from older operators it and auction it at a later date. The operators can be given spectrum in 1,800 MHz instead. However, in its clarification on Sunday, Trai said in circles where there's enough spectrum left after meeting the needs for refarming, the government can auction 10 MHz instead.

Similarly, in the 800 MHz band (CDMA) it said on Sunday that in circles where the spectrum is less than 5 MHz, the reserve price be brought down 1.3 times the reserve price of 1,800 MHz band. Earlier it was double of the 1,800 MHz.

On the spectrum usage charge where it had earlier said that it should be 1% of the adjusted gross revenue of operators, the Trai has now revised it to 3% of AGR.