Telecom regulator TRAI on Monday proposed a steep minimum price for auction of 2G telecom spectrum, setting off fears of a hike in mobile phone tariffs which are at present among the cheapest in the world.
The regulator, whose recommendations are not binding on the government, valued 2G spectrum at about Rs 7 lakh crore, nearly seven times more than Rs 1.04 lakh crore that the government had received through auction of 3G spectrum in 2010.
The Telecom Regulatory Authority of India (TRAI) proposed a minimum or base price of Rs 3,622.18 crore for every mega Hertz of spectrum in the 1800 MHz band, where radio airwaves have been freed after the Supreme Court cancelled all mobile permits issued by the then telecom minister A Raja in 2008. The price set is around 10 times more than what companies such as Unitech Wireless, Swan Telecom and Shyam Telecom paid for at least 4.4 MHz of all-India spectrum in 2008.
A pan-India spectrum in 1800 MHz band will cost Rs 18,000 crore. The reserve price is several times the base price of Rs 3,500 crore for 3G spectrum auction. TRAI recommended that auction should be open to all companies except those having a more than prescribed limit of spectrum, potentially disqualifying incumbents like Airtel, Vodafone and BSNL.
Telecom operators were naturally not happy with the recommendations with some even mulling legal action on the grounds that the regulator had exceeded its brief. Expressing concern at TRAI recommendation, Vodafone said: "We believe that several of these recommendations are retrograde and if accepted, will do irreparable harm to the industry." Deloitte Haskins & Sells said highe price for spectrum may ultimately lead to upward revision in tariffs.
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