High spectrum resale price won’t hit user tariffs: TRAI

Unfazed by the widespread criticism of its new draft norms for the resale of cancelled telecom licences, Telecom Regulatory Authority of India chairman J S Sarma said the high base price proposed for the bidding will not lead to a steep hike in tariffs, as is widely feared.

In an interview with NDTV, Sarma said he isn't surprised at the industry's reaction. He rejected the charge of telecom firms that tariffs will rise by 25-30 per cent if the proposals are accepted, saying the increase if any will be very marginal.

"I am not really surprised because this is not the first time this has happened … earlier also, in 2010 (when 3G spectrum was auctioned), the reaction was similar but over a period of time the government has accepted all the recommendations," Sarma said.

TRAI had come out with the proposals in April, pursuant of a Supreme Court order on 2 February cancelling 122 telecom licences awarded in 2008 under the jailed former telecom minister A Raja. The court had mandated that the spectrum thus vacated must be auctioned.

Five telecom operators, including established players Vodafone and Bharti Airtel, had written to Telecom Minister Kapil Sibal earlier, saying the high cost of airwaves, as recommended by TRAI, could raise mobile tariffs by up to 30 per cent.

In its recommendations, TRAI proposed a base price of Rs3,622 crore for every MHz of spectrum in the 1800 MHz band, which means the minimum price for the full 5MHz that's needed to start mobile services comes to Rs18,110 crore.