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Trai pegs 22% lower reserve price for 3G spectrum sale

Proposes Rs2,720 crore per MHz for winning a pan-India licence.

By: ENS Economic Bureau | Amitabh Sinha & D K Singhnew Delhi, New Delhi |
Updated: January 1, 2015 12:00:06 am

The Telecom Regulatory Authority of India (Trai) set a 22 per cent lower reserve price for the upcoming auction of 3G spectrum but warned that defence ministry and the department of telecommunications (DoT) have to work together to release adequate spectrum for the auctions to be meaningful.

Echoing Prime Minister’s emphasis on ‘Digital India’, the regulator linked the lower price of Rs 2,720 crore per MHz for winning a pan India 3G licence in the February auctions with the making available of at least another 15 MHz airwave per circle.

Trai chairman Rahul Khullar described his recommendations as “reasonable”.

No Indian telecom company including Bharti or Vodafone has a pan India 3G licence. The irregular availability has led to rising prices but inconsistent quality of internet and other services for consumers. The auction is meant to release more spectrum in the crucial 2,100 MHz for the firms but differences between the DoT and the defence ministry had made this difficult so far. The DoT had written to Trai in October stating its intentions to auction airwaves in 2,100 (3G), 2,300 and 2,500 MHz bands in February, along with 800, 900 and 1,800 MHz bands. With the defence ministry agreeing in principle to swap their holdings of 15 MHz in 2,100 MHz band for space in 1,900 MHz band, the DoT asked the authority to expedite recommendations on its pricing.The reduced overall valuation of the band, placed at about Rs 3,400 crore per MHz currently, has been justified by Trai saying that the 2010 auctions were conducted in a “supply-constrained scenario, with the demand for spectrum being conditioned by irrational exuberance and excessive competition.”

In order to avoid a price war and ease shortage of spectrum, the regulator has stressed upon the inclusion of the 3G band in the upcoming auctions irrespective of the timeline of the actual swap by the defence ministry, adding that the roll out by the operators is also not going to be immediate. Trai has also recommended that no bidder be permitted to bid for more than two blocks in a service area if 3-4 blocks are available.

The proposals also state that the roll out obligations for telcos winning airwaves in a new circle remain similar to those in 2010, such as providing street level coverage in at least 90 per cent of the service area in Delhi, Mumbai and Kolkata circles, with the time frame for the same, however, being reduced to three years from five years previously.

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