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TRAI stands by its proposal for cut in auction reserve price

New Delhi: Telecom regulator TRAI Wednesday reiterated its recommendations for up to 60 percent cut in the reserve or base price for sale of mobile phone radiowaves in the upcoming third round of auction.Responding to

PTI [ Updated: October 23, 2013 22:52 IST ]
trai stands by its proposal for cut in auction reserve price
trai stands by its proposal for cut in auction reserve price

New Delhi: Telecom regulator TRAI Wednesday reiterated its recommendations for up to 60 percent cut in the reserve or base price for sale of mobile phone radiowaves in the upcoming third round of auction.

Responding to clarifications sought by the Department of Telecom, TRAI reiterated that the auction reserve price for spectrum in the 900 megahertz band in some key cities be cut by 60 percent.

The Telecom Regulatory Authority of India had also suggested 37 percent cut in the reserve price for spectrum in the 1800 MHz band.

The DoT committee, which had referred the matter back to TRAI, is studying the clarifications and is likely to submit its report in the next few days, official sources said.

The committee's views will be placed before the inter- ministerial body Telecom Commission (TC) at its October 29 meeting.

The stand taken by TC will be placed before the Empowered Group of Ministers on spectrum for a decision, the sources said.

TRAI also stood by its stand of not recommending the auction of 800 MHz band, used by CDMA operators, in the upcoming auction saying that there is a large gap in the worth of spectrum in its present use as against its potential use and "no hasty decision" should be taken on the matter.

Questioning the sharp cut in base rates, the DoT panel had asked TRAI to reconsider its recommended reserve price.

DoT was of the view that the valuation did not appear to reflect the value of the liberalised spectrum, which has a much greater potential than 2G over the next 20 years.

However, in its response, TRAI reiterated its approach of calculating the reserve price.

"The methodologies used by the Authority are grounded in economic theory and have widespread international acceptance," it said.

Seeking clarifications, the DoT panel had said:"Deviation of various constants, co-efficient and variables to arrive at the reserve price under different approach appears to be based on certain assumptions, on which no clarity could emerge from recommendation."

Terming DoT's observation puzzling, TRAI said the assumptions, data sources and methodology adopted in calculating the value of spectrum under different approaches have been clearly explained.

On DoT's request to provide reserve price of 900 MHz spectrum in remaining 19 circles, TRAI said: "Once again, the observations are puzzling and erroneous. The assumptions and methodology adopted in estimating the value of 900 MHz spectrum based on value of 1800 MHz spectrum have been lucidly and elaborately spelt out...Perhaps a re-reading will provide the necessary clarity."

TRAI said DoT had requested recommendations on reserve prices in the 900 MHz band for Delhi, Mumbai and Kolkata only.

The regulator had recommended a sharp reduction of about 60 percent in the reserve price of 900 MHz band for these three circles compared to the last auction.

On auction of 800 MHz band, TRAI had suggested no auction as there was no demand for these airwaves in the last auction and only one company had participated in March 2013 auction.

It said the government has already put the entire spectrum -- released as a result of quashing of 122 licences by the Supreme Court in 2G spectrum allocation case last year -- and thus complied with the court order; hence, there is no compulsion to auction this band.

"...There is no compelling reason for the DoT to auction the spectrum in 800 MHz band along with 900/1800 MHz spectrum," it added.

TRAI said deployment of an existing technology in a band does not provide an accurate measure of the worth of that spectrum, especially if the technology is dying.

That was the reason why it had recommended adoption of E-GSM in a time-bound manner.

"The Authority reiterates its recommendations that the government should first fully explore the feasibility of adoption of E-GSM band before reaching any hasty conclusion," TRAI said.

TRAI also stood by its recommendation on charging a flat spectrum usage charge (SUC) for auctioned spectrum.

The DoT has said recommendations are not implementable on the ground that the revenue from administratively assigned spectrum and auctioned spectrum cannot be segregated.

However, TRAI said no segregation is required as it had recommended that spectrum allocated through auction should be charged at a flat rate.

Operators holding only administratively assigned spectrum and mix of auctioned spectrum and administrative assignment, would continue to pay the SUC at slab rates, it added.

TRAI also reiterated its recommendation to bring the highest slab rate of SUC down to 5 percent from 8 percent.

Sticking to its recommendation of not reserving spectrum for existing operators, TRAI said restricting the quantum of spectrum for auction would not enable fair price discovery.

TRAI, however, accepted DoT's view that eligibility condition should be modified with respect to quashed licensee as there would be no quashed licensee in the next auction.

It agreed with DoT's view that any eligible entity can participate as new entrant or existing licensee.

On spectrum trading, the authority said it will shortly work out the detailed guidelines for its implementation.

On roll-out obligations, TRAI reiterated that all licensees having access spectrum (800/900/1800 MHz band) should have the same conditions.

The government has to conduct the third round of spectrum auction following the Supreme Court's directive after it had cancelled the 122 licences in February 2012.

Another set of auction for 900 Mhz has to be conducted as some of the radiowaves in this band are held under old telecom licences which will start expiring from November 2014.

The government expects at least Rs 11,000 crore from the spectrum auction.


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