Spectrum price to be decided by ministerial panel
NEW DELHI AN Empowered Group of Ministers (EGoM) in India may early next month decide on the base price for auction of telecom spectrum after an interministerial panel presents pros and cons of accepting sectoral regulator Trai’s steep reserve price.
The Telecom Commission (TC), which had earlier this week fixed modalities of the spectrum auction necessitated by the cancellation of 122 2G licences by Supreme Court, deliberated on the base price suggested by Trai.
However, it has decided to leave the decision upon Finance Minister Pranab Mukherjee-headed panel.
“The TC took note of reserve price which Trai has recommended and it (TC) felt that an analysis needs to be made and presented to EGoM on the impact of spectrum price on certain parameters that have been worked out,” TC Chairman and DoT secretary R Chandrashekhar told reporters in New Delhi.
He added that analysis would be carried out by Trai keeping in mind that a balance needs to be struck between spectrum price and three other critical factors — revenue to government, tariff to consumer and viability of investment and continued attractiveness of the sector.
The Telecom Regulatory Authority of India has proposed Rs 3,622.18 crore for one megahertz (MHz) as base or minimum price for pan-India spectrum for auction.
This suggested price is around 10 times higher than the floor price at which the former Telecom Minister A Raja had allocated spectrum and licences in 2008.
“An analysis needs to be made and presented to the EGoM on the impact of this reserve price...impact of spectrum price on tariff if it is passed on, second if absorbed then impact on investment, viability and return on investment,” Chandrashekhar said.
The apex court had cancelled the licences in the 2G spectrum case, following which Trai was asked to recommend auction modalities for the cancelled permits in the 800 MHz (CDMA services) and 900 MHz (GSM services) bands.
Although the commission has left the reserve price decision with EGoM, it has agreed with Trai’s view that the reserve price for these bands be at least 2 times higher than that of minimum price for 1800 MHz band (also used be GSM operators currently).
Chandrashekhar said the Department of Telecom will make certain analysis which will be presented before the EGoM.
“We hope to work on finalising our proposition to EGoM by end of month.
By the time EGoM meets, we hope analysis of Trai to be available,” he said.
Representations made by industry players will also be sent to Trai for consideration as part of its analysis.
Chandrashekhar said the Commission would also ask for Trai’s inputs on whether a period of 10 years for pricing of spectrum would be more appropriate keeping in view the rapid changing technology.
“The Commission felt that the Trai’s inputs should be sought on, keeping in view the rapid changes in technology, whether for the purpose of pricing a period of 10 years would be more appropriate...this is without interfering with the assignment (of licence) for a 20-year period,” he said.
The commission has not taken any decision on spectrum other than the 800 MHz and 1800 MHz bands. “The TC has however agreed with the timeline of 900 MHz spectrum auction, which would have to be completed 18 months before the renewal comes up,” Chandrashekhar added.
Also, TC has agreed to Trai proposal of levying spectrum usage charges at three per cent, while the recommendation for deferred payment did not find favour with it.
On mortgage of spectrum to raise funds, Chandrashekhar said, “In principle, we have agreed but modalities would have to be discussed with the Finance Ministry and the RBI.”