Some cheers, some heartburn over TRAI’s new auction policy

The telecom industry is far from united in its praise of the move by the Telecom Regulatory Authority of India to lower the minimum or reserve price for the next auction of GSM spectrum by up to 62 per cent.

The proposal, announced on Monday, seems to be a mixed bag for the telecom industry – and in particular, it does not hold anything for operators on the CDMA platform.

Arvind Bali, director and chief executive of Videocon Telecommunications, said, ''TRAI's recommendations favour existing players who acquired licences prior to 2008, and penalise new players like us.''

Bali added, ''The spectrum that we recently acquired has already become cheaper. We strongly recommend that the excess money paid by us (that is, the difference between the price paid and the successful bid price of the upcoming auction) should be refunded either in monetary terms or through additional spectrum.''

Rajan Matthews, director-general of the Cellular Operators' Association of India (COAI), which represents GSM operators, also had reservations. ''After Monday's decision, the reserve price, which was at 80 per cent of spectrum valuation, would still be too close to the spectrum valuation. The reserve price should not be more than 30 per cent.

''Moreover, TRAI has failed to provide guaranteed 900 MHz spectrum to incumbents, forcing them to participate in an auction to win back their existing 900 MHz spectrum at the new reserve price.''

But he said auction participation will be higher due to lower prices as well as flat AGR (adjusted gross revenue) of 3 per cent, including for internet service providers (ISPs), ''which will promote fair play''.

The last auction in March saw very poor participation, which was blamed on the high reserve price set by the government.

At the same time, the single bidder in that auction, MTS (formerly Sistema Shyam), which won spectrum in eight circles, will gain nothing from the auction, as it operates in the 800 MHz (CDMA) band.

Lamenting this, Ashok Sud, secretary-general of the Association of Unified Telecom Service Providers of India  (AUSPI) which represents operators on the CDMA platform, said, ''We are also dismayed that TRAI has consented to GSM (operators') demands by suggesting that a part of the 800 MHz spectrum be carved out for the extended GSM band (e-GSM). These two issues make it very difficult for CDMA operators to grow their operations or buy more spectrum.''

Both GSM and CDMA players have appealed to the Department of Telecommunications to consider their situation after the TRAI recommendations.

(See: Reserve price for 2G auction may be slashed by up to 62%)