Trai move to hike tariffs 100%: Telcos

Burying their differences,telcos upped the ante against TRAI’s recommendations.

Written by ENS Economic Bureau | New Delhi | Published: May 4, 2012 12:57 am

Burying their differences,telecom operators on Thursday upped the ante against Telecom Regulatory Authority of India’s (Trai) recommendations for a 10 fold hike in the reserve price of 2G spectrum and roll-out obligations. Telcos collectively rejected the recommendations,calling them “flawed,retrograde,regressive and uncertain.”

Industry body,the Cellular Operators Association of India (COAI),warned that mobile tariffs could go up by 100 per cent if these are accepted and implemented. “Trai’s contention that the high base price would result in just a 2 paise per minute increase in call tariffs is not true. We have already been incurring losses quarter after quarter,and this will impact our baselines further,” said Sanjay Kapoor,CEO (India and South Asia),Airtel and chairman COAI.

The statement comes a day after operators under the umbrella of COAI held parleys with several Cabinet ministers,including finance minister Pranab Mukherjee and telecom minister Kapil Sibal as well as Planning Commission deputy chairman Montek Singh Ahluwalia to protest against Trai’s recommendations.

Following a Supreme Court directive on February 2 to cancel and re-auction 122 telecom licences,the regulator has suggested a base price of Rs 3,622 crore for 1 megahertz (MHz) for pan-India spectrum. This is about 10 times higher than the price at which 2G licences bundled with 4.4 MHz spectrum were allocated in 2008 under former telecom minister A Raja.

Terming the recent developments as the “most disruptive regulatory environment since the inception of the (telecom) industry,” Kapoor said Trai’s recommendations would harm consumer interest and ring a death knell of the telecom industry.

The COAI said that the recommendations would adversely impact the rollout of telecom services,especially in rural areas. Further,the refarming process would attract huge investments from operators and the consumers will have to bear the brunt of increased costs.

Pointing to their deteriorating finances,operators have also contended that implementing the recommendations would also limit their investment capacities. COAI has instead suggested that all available spectrum should be auctioned at a reserve price that is less by at least 80 per cent than what has been recommended by Trai.

Meanwhile,in another development,the Department of Telecommunications today asked the Trai to explain how it had arrived at the steep base price for the 2G spectrum sale,according to a PTI report.

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