Five telecom operators,including Bharti Airtel and Vodafone,have written to Telecom Minister Kapil Sibal saying the high cost of airwaves,as recommended by Trai,can raise mobile tariffs by up to 30 per cent.
“It is respectfully submitted that the high cost of spectrum will translate into much a higher tariff for consumers. It is estimated that tariffs will go up by at least 25-30 per cent,” a letter by five service providers to Sibal said.
“Trai has failed to appreciate that such high prices are completely unsustainable in a highly price sensitive market such as India which has an average revenue per user of less than Rs 90,which has a poor teledensity and requires huge investments to roll out networks in rural and remote areas,” they said.
The letter jointly written by Bharti Airtel,Vodafone,Idea Cellular,Uninor and Videocon Telecommunications said that the high auction price,if at all paid,will not leave any resource in the hands of the operators to do the required network rollouts.
“In fact,it is likely to push back the industry by several years,thus compromising both the connectivity as well as broadband agenda of the country,” the telecom operators said.
The Telecom Regulatory Authority of India (Trai) has recommended base price of Rs 3,622 crore for a megahertz of spectrum at pan-India level that is around 10 times higher than the price for 2G licences in 2008,when A Raja was the Telecom Minister.
According to Trai recommendations,a minimum of 5 Mhz should be allotted,which means that pan-India spectrum in 1800 MHz band will cost Rs 18,000 crore. The reserve price is five times the base price of Rs 3,500 crore for 3G auction.
The five companies,which account for majority of market share,demanded that government should reduce steep high prices for spectrum proposed by the regulator by 80 per cent.
“…allow the market to discover the true spectrum price,” the telecom operators demanded.
The companies said: “the Trai recommended rollout obligations are extremely onerous and unwarranted. Having paid the market or auction price for spectrum,there is no justification for mandating any rollout obligation. The recommendations on so called ‘refarming’ have no nexus with the Supreme Court judgment”.
Trai’s has recommendation existing GSM mobile service provider using 900 Mhz spectrum band could be migrated to 1800 Mhz band to provide services.
Higher the frequency band more is investment required for building telecom network.
At present more than 53.9 per cent of mobile subscribers are being served on 900MHz network and 12.9 per cent of mobile subscribers through 800 MHz network,the letter said.
“On the average,66.8 per cent of the total mobile customers in the country are being served using the network on 900 and 800 MHz network.” letter said.