Stung by sectoral regulator Trai's recommendation to charge a one-time fee for extra spectrum, leading telecom firms Bharti, Vodafone and Idea have shot off a letter to Telecom Minister Kapil Sibal proposing holding of auction to arrive at a fair price.
"We are writing to you to express our deep concerns on subject of spectrum pricing included in Trai recommendations," Sanjay Kapoor of Bharti Airtel, Himashu Kapania of Idea Cellular and Marten Pieters of Vodafone India wrote in a joint letter to Sibal.
The letter was also sent to all the members of the Telecom Commission, the decision-making arm of the Telecom Ministry.
Trai's recommendations wrongly propose to charge a one-time fee on spectrum that was allocated by DoT at an agreed consideration on additional revenue share basis at 1-2 per cent of adjusted gross revenue, the top executives claimed.
This round of letters comes within days of the CEOs meeting Prime Minister Manmohan Singh, Finance Minister Pranab mukherjee and senior-most officials in various ministries to put forward their points.
"...We seek your urgent consideration on some of the key concerns: The UASL or CMPS's licences, contained provisions to pay a one-time entry fee and to pay all other charges on revenue share basis.
"A one-time spectrum charge was never a part of either of the licences. It is, therefore, surprising that Trai is recommending a one-time spectrum charge in complete contradiction to DoT's existing licence terms. Further, it is against the agreed terms of migration to UAS licence," they said.
Further, spectrum prices as recommended by the expert committee nominated by Trai are arbitrary and are based on wrong assumptions, resulting in gross discrimination against operators, the letter said.
The current price recommended by Trai is completely flawed and lacks any economical or logical basis. If implemented, these recommendations will have serious negative implications on the sector, the letter said.
Trai had recommended that each MhZ of additional spectrum, after the 6.2 MHz limit, held by operators should cost a one-time Rs 4,571.87 crore (all-India).
However, the one-time fee would vary from circle to circle and the operators would have to pay only for those where they hold extra spectrum, Trai had recommended.
For finalising the one-time charge applicable beyond 6.2 MHz, the firms supported the route of auction instead of Trai recommendations.
According to Trai recommendations, all licences would have to pay for spectrum at the current price at the time of renewal of licences, or else at price to be discovered through auction or any other market-driven mechanism.
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Tariffs are determined primarily on cost-plus method and reviewed by the electricity regulatory commissions