The Telecom Regulatory Authority of India (Trai) recommendations are completely different from the industry committee recommendations set up three years back. The government had set up a committee to make a string of recommendations to clean up the ?cluttered? telecom space and chart out the growth path for the industry as a result of the fallout of the controversial allotment of the telecom licences in 2007.
The committee headed by the department of telecommunications additional secretary Subodh Kumar had outrightly recommended auction of the 2G spectrum, enabling the consolidation of the industry as this would improve spectrum utilisation, spectrum trading and spectrum-sharing along with a uniform spectrum fee of 3%.
The committee suggested the 2G spectrum be auctioned beyond the start-up 4.4 mhz and that the incumbent operators who hold more than the prescribed limit should pay up a one time spectrum fee.
The Trai recommendations, however, are sharply different. In spite of acknowledging the importance of a market price discovery for the scarce natural resource, it has completely rejected the concept of another auction. Instead it has recommended that 6.2 mhz and not the 4.4 mhz is the ?committed? spectrum under the telecom licence. Secondly, spectrum allotment beyond this threshold should be leased to the operators by charging them in relation to the 3G spectrum price.
Secondly, while the committee recommended mergers and acquisitions to be allowed to consolidate the industry and improve spectrum utilisation efficiency, it is still a toss up whether the recommendations will encourage or discourage the consolidation. The committee had said that the operators should be allowed to consolidate while paying an upfront cost to the government. However, the regulator has added that apart from the transaction fee, the government would receive the spectrum acquisition fee for spectrum in excess of the committed 6.2 mhz held by the new entity. ?This doesn?t sound like an extremely encouraging clause for consolidation, given the current 3G auction prices this will mean a hefty upfront payment for operators?, a highly placed official of a telecom company told FE
While the committee had recommended that a uniform spectrum usage fee be charged at 3% irrespective of the quantum of spectrum held by operators, the regulator has suggested that 0.5% usage fee for spectrum up till 6.2 mhz and 1% for spectrum held beyond that.
The committee had recommended that spectrum trading be allowed between operators since the country had achieved the desired level of telecom infrastructure, previously a deterrent for allowing spectrum trading. The regulator, however, has rejected the trading and proposed that new operators and start-ups instead go for spectrum sharing.
