Telecom Commission asks TRAI to explain basis of fixing base price

Telecom Lead India: The Department of Telecommunications
(DoT) has asked TRAI to explain the basis of fixing the base price for 2G

TRAI chairman is under pressure to explain his and his
team’s decision to arrive at significant increase in base prices. There are
rumors that Reliance Industries will become the biggest beneficiary if the
auction goes ahead with the current reserve price.

Telecom industry does not want to match American spectrum
pricing as it is a developed nation. We are getting small chunk of spectrum.
We look forward for more transparent and supportive and predictive government
policies,” said Airtel CEO Sanjay Kapoor.

Telecom Commission, according to a PTI report, sent
detailed comments on TRAI’s recommendations for auction of 2G spectrum.

The telecom regulator, which is facing criticism from the
mobile industry, needs to reply within a fortnight. It is important to note
that the current TRAI chairman will be relinquishing the office in May.

DoT has sought clarification on the basis on which
the efficiency factor and other indicators of the price has been derived,
in fixing the base price for spectrum in 800 MHz and 1800 MHz bands due
for auction and especially keeping in the view the multiplication factor
of 1.5 for 800/900 MHz bands prescribed by TRAI in its recommendations of
May 2012 and February 2011.

Telecom service providers have been allocated spectrum
in 800, 900 and 1800 MHz bands for providing 2G mobile services.

TRAI has suggested a base price of Rs 3,622 crore
for one MHz for pan-India spectrum. This is around 10 times higher
than the price at which 2G licences bundled with 4.4 MHz spectrum were
allocated in 2008 under the then Telecom Minister A Raja.

TRAI said that the price of spectrum in 800 MHz and
900 MHz should be twice the price of spectrum in 1800 MHz. In its earlier
recommendation, it said price of spectrum in 900 MHz band should be 1.5
times the price of spectrum in 1800 MHz band.

Meanwhile, industry body Cellular Operators Association
of India (COAI) has assembled top officials from Bharti Airtel, Idea Cellular,
Vodafone, Videocon and Telenor to up the pressure on the telecom regulator.

At a press meet in Delhi, COAI raised question on these change
in the multiplication factor while calculating the base price of spectrum
by TRAI.

In May 2010, regulator came out to set 2G prices in line
with 3G prices as basic minimum bidding price. In May 2010 we heard that
900 MHz band should be 1.5 times of 1800 Mhz. Now in April 2012 it should
be 2 times. We are confused.. which methodology is right,” said COAI
chairman and Bharti Airtel CEO Sanjay Kapoor at a press meet organized by

Telecom industry is indicating that the entire process
will affect the mood of the industry. The recent decisions are going to affect
the spectrum auctions,” said a top official with a mobile service provider.

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