GSMA urges India’s Telecom Commission to reduce spectrum auction reserve prices

GSM Association (GSMA) has urged India's Telecom Commission to reduce spectrum auction reserve prices, stating that the total price of Rs536,239 crore is almost double the cost of all spectrum investment to date in India.

''The GSMA is concerned that, if the Telecom Commission maintains the current reserve prices for 700 MHz spectrum in India, there is the risk of a failed auction or, at a minimum, serious limitations on investment capability in next generation networks, denying the enabling social and economic power of this important spectrum resource to the citizens of India,'' said John Giusti, chief regulatory officer at GSMA.

GSM is the apex body of telecom operators across the world and the association has moved India's Telecom Commission, the highest decision-making of Telecom Regulatory Authority in India (TRAI).

He was commenting on the importance of adjusting reserve prices for forthcoming 700MHz spectrum auction.

''The reserve prices for this much-needed spectrum are unrealistic in relation to the economics of the mobile industry. In fact, the total recommended reserve prices of Rs536,239 crore (over $80 billion) for the spectrum bands in the auction are almost double the cost of all spectrum investment to date in India. This equates to more than 20 times the annual free cash flow of the entire mobile industry in India,'' he said.

Stating the government's decision to reduce Spectrum Usage Charges (SUC) from 5 to 3 per cent is a step in the right direction, he said it will not do enough to offset such high spectrum prices.

''In competitive markets such as India, setting reasonable reserve prices would allow auction mechanisms to work in determining the market price in assigning the spectrum,'' he added.