The Telecom Commission may have expressed doubts over the sharp reduction in the reserve price recommended by the Telecom Regulatory Authority of India (Trai) and asked it to provide clarifications, but it is now clear that at least one constituent of the commission ? the Planning Commission ? fully supported the reserve price, its methodology and rationale.
In a note to the department of telecommunications (DoT) on September 30, with the request that it be treated as the views of the Planning Commission and be ?placed before the Telecom Commission during its meeting on October 3?, the planning body has stated: ?They (reserve price) appear to be based on robust assumptions and in line with the international practice. As stated earlier in the absence of any alternative approach being thrown up in the consultative process leading to the Trai recommendations, the basis may be accepted and the reserve price recommended for 1,800 Mhz and 900 Mhz, and no auction for 800 Mhz may be supported.?
The note has added that the ?principles, underlying logic and analytic framework for arriving at a reserve price through valuation based on bottom up approach from LSAs to a pan-India price have been exhaustively discussed in the recommendations.
The note written by an adviser has the approval of the deputy chairman of the commission, Montek Singh Ahluwalia.
?For a variety of reasons, as the foreword to the Trai recommendations notes, there is a compelling need (now) for a successful auction. For this to happen, it is essential that the policy environment is conducive to revival of the confidence of the industry and also provides the much needed revenues to the government… Therefore the Trai recommendations on reserve price must be viewed as a package that includes spectrum trading, merger and acquisition guidelines and sharing of spectrum; a flat regime for spectrum usage charge and a level-playing field for roll out obligations for all service providers. DoT needs to take a view on the above within the framework of NTP 2012 well before the auction of 1,800 and 900 Mhz is held. In fact, they must form part of the auction conditions to realise full value,? the Planning Commission note has said.
It has fully supported spectrum trading and a flat 3% SUC recommended by the Trai.
The Telecom Commission comprises the telecom secretary, finance secretary, DIPP secretary and the member secretary of the Planning Commission.
The wholehearted support to the Trai’s recommendations on reserve price, spectrum usage charge, spectrum trading and other policy issues by the Planning Commission is significant since it was largely due to an earlier letter written by Montek to telecom minister Kapil Sibal, urging for a fresh reference to the Trai for reserve price, that the government adopted this path.
Montek is also a member of the empowered group of ministers on telecom which will take a final decision on the reserve price once it is approved by the Telecom Commission.
As is known that at its meeting on October 3, the Telecom Commission has asked Trai for certain clarifications. For instance, in the 1,800 Mhz band, where the Trai has suggested reduction in reserve price by 37%, the commission wants to know the methodology adopted to arrive at these prices. The commission has also asked the Trai to provide a reserve price for the 800 Mhz (CDMA) band. The Trai had suggested no auction for CDMA as of now since there was no demand for these airwaves in the last auction and only one company had participated in the March 2013 auction, that too on a price which was reduced by 50%.
It has also asked the Trai whether moving towards a 3% uniform SUC is legally tenable.
