TRAI firm on lower auction reserve price for spectrum

The Telecom Regulatory Authority of India (TRAI) has refused to alter its position on lowering the reserve price for spectrum auction by 60 per cent and has rejected a request by the department of telecommunications (DoT) to raise the base price.

TRAI said the reserve prices for 1800 MHz and 900 MHz remain unchanged at the level already recommended by it.

''Since the recommendations on the reserve price obtained for different LSAs follow, in logical sequence, from the valuation through adoption of different economic methodologies, the Authority did not find any scope to ''reconsider'' the reserve price, as suggested by the DoT,'' TRAI said in its reply.

The telecom sector regulator also justified its recommendation against holding auction for CDMA operators and for fixing a flat annual fee for using spectrum.

TRAI had proposed a reduction in the reserve price for 5 MHz pan-India spectrum in the 1800 MHz band to Rs7,480 crore, from the Rs18,110 crore recommended earlier.

A panel appointed by the DoT had earlier said that the reserve price proposed by TRAI did not reflect the value of the spectrum keeping in view the growth potential and projections in the telecom sector. The Telecom Commission had sent the panel's report to TRAI seeking a review.

TRAI said it recommended a lower base price for spectrum auction in order to ensure an open, transparent, objective, responsive, unrestricted and successful auction of 900 MHz and 1800 MHz spectrum and to ensure a level playing field amongst bidders.

TRAI also has reiterated its recommendation regarding no reservation / priority in the 900/1800 MHz band.

TRAI had also recommended a harmonisation of roll-out objectives in order to correct the present urban-centric bias and to enhance rural coverage as envisioned in the NTP 2012.

The DoT has conveyed its in-principle acceptance on spectrum trading.  Accordingly, TRAI said it would shortly work-out the detailed guidelines on spectrum trading.

On auction of 800 MHz spectrum, TRAI has again recommended that the government must first explore the feasibility of adoption of the E-GSM band before reaching any hasty conclusion. 

On Spectrum Usage Charges (SUC), TRAI has reiterated its recommendations for a graduated transition from the existing regime with its many limitations, to a more balanced, equitable and rational system.

The DoT panel had rejected TRAI's recommendation to introduce a flat charge for using spectrum instead of the existing slab-based system wherein operators with larger amounts of spectrum have to pay a higher charge ranging between 3 and 8 per cent of the annual revenues.

While TRAI had said that all operators should pay 3 per cent of their annual revenues for using the spectrum, the DoT panel had said that this would go against the rules specified at the time of auctioning broadband spectrum in 2010.

Players that won broadband spectrum were told then that they would have to pay only one per cent of their revenues for using airwaves.

TRAI, however, said that since technological changes now allow broadband players to also offer voice, collecting a lower charge from them would be unfair to other telecom companies.

TRAI said that if the DoT was concerned about changing the rules of the broadband auction then the charges for all players could be brought down to 1 per cent.

''The benefits of a graduated transition to a uniform rate are that it will not only simplify the levy structure but will also enable the policy initiatives on merger acquisition, sharing and spectrum trading to be implemented without any inherent disincentives,'' TRAI said