Auction more spectrum or tariffs will rise: Telcos

Leading cellular operators have told Communications Minister Kapil Sibal that while they endorse future auction of 2G and 3G spectrum, they are concerned that the limited bandwidth offered would push tariffs upward.

In May’s 3G auction during the tenure of tainted communications minister A Raja, only three blocks of licences a circle were offered to the private sector, even though there were nine operators in the fray. In the case of broadband wireless access, only two blocks of spectrum were offered though there were 11 hopefuls.

Sibal met representatives of telcos on Thursday night. He assured them more spectrum would be made available and promised to talk to the ministry of defence to release bandwidth. Sibal said he would ensure a level playing field and hold with them regular discussions on all key policy issues.

Those who attended the meeting included Vodafone-Essar chief Marten Peters, Bharti Airtel CEO Sanjay Kapur, Sistema Shyam CEO V Rozanov and Reliance Communications President C S Rao.

Peters said operators had to pay hefty premiums for 3G because of the limited spectrum on offer. “What we want is that enough spectrum be available before the bidding process is undertaken.”

Peters gave the example of Germany, which has a telecom industry of similar size to India’s in terms of revenue. Germany’s auction offered 60 MHz of spectrum, while India offered only 10 MHz. “Yet, we paid over one-and-a-half times more than them,” added Peters.

Sibal also conveyed to the operators that the telecom industry would not be seen just as a revenue generator, but as playing a key role in development. Said Peters: “The industry pays the government over Rs 18,000 crore already. As telecom is a regulated industry, it is the duty of the government to ensure its sustainability.”

Operators also raised various issues like removing the anomaly between spectrum user charges of GSM operators and that of dual technology licensees. Others argue that the government takes 25-26 per cent of their revenues in various taxes or imposts, while globally it is not more than 10 per cent to 14 per cent.

“The government had earlier said it would provide operators a concession of 2 per cent on their licence fee if they met their rural rollout obligation. But this was not done, which is not fair,” said the CEO of a telecom operator.