Telecom panel seeks review of base price for 3G airwave auction

Just ahead of the February sale of telecom spectrum, the inter-ministerial Telecom Commission has sent back TRAI's recommendations on 3G spectrum pricing for reconsideration.

The holding-back of 3G airwaves by the government has led to much hand-wringing by potential bidders, who say the entire amount of spectrum held by the government should be put up for auction at one go rather than in piecemeal fashion.

The Telecom Commission in its meeting today discussed the proposals of the Telecom Regulatory Authority of India on the base price for the 2100 MHz band, which is used for 3G services, and decided to send back the recommendations to TRAI for a review.

The regulator on 31 December recommended a base price of Rs2,720 crore per megahertz. An internal committee of the Department of Telecommunications (DoT) is said to have suggested fixing base price of 3G spectrum at Rs3,899 crore per megahertz, about 43 per cent higher than the rate recommended by TRAI.

"The committee is of the view that market-determined price of 2010 should be indexed using SBI PLR and 80 per cent of that price can be fixed as reserve price for 2100 Mhz band (used for 3G services)," PTI cited a source as saying.

The TRAI, using SBI PLR, worked out the indexed price of Rs 4,874.59 crore per megahertz. Back of the envelope calculations show that 80 percent value of indexed price will come to about Rs3,899 crore/MHz.

As per the practice in place, TRAI sends back its final comments in about 15 days, which are again placed before the Telecom Commission for its final call.

In 2010, the final 3G spectrum rate paid by telecom operators was Rs3,349.87 crore per megahertz. Telecom Minister Ravi Shankar Prasad has said the government intends to auction third generation or 3G spectrum in 2,100 MHz simultaneously with 2G airwaves.