Ministerial panel meets today to decide on reserve price

The empowered group of ministers (EGoM) on the auction of telecom spectrum, headed by Finance Minister Pranab Mukherjee, would meet tomorrow to decide on the reserve price for the auction.

The EGoM would decide whether to opt for the reserve price recommended by the Telecom Regulatory Authority of India (Trai) or that suggested by an internal committee of the Department of Telecommunications (DoT). Trai had suggested Rs 18,000 crore as the all-India base price for auction of 5 MHz spectrum, while the DoT panel had proposed a price 17 per cent higher.

For one MHz in the 1,800 MHz band, Trai had recommended a price of Rs 3,622 crore, while according to DoT's calculations, the figure stood at Rs 4,245 crore per MHz.

The EGoM would also decide on whether to auction 10 MHz of spectrum after keeping spectrum for refarming (Trai had recommended auction of 5 Mhz) or auction all spectrum, including the 55 MHz to be released by defence forces.

On May 26, the Telecom Commission had put the onus of deciding the issue of the base price for auctioning 1,800 MHz of 2G band spectrum on the EGoM.

Telecom operators have been up in arms against Trai’s proposals, saying if the regulator’s suggestions were accepted, it would impact the growth of the industry and rates could rise 26-90 paisa/minute, depending on the respective circle.

The Telecom Commission had also decided to ask the regulator to reconsider the impact the reserve price would have on rates, as well as on investments by telecom companies. Trai is expected to present its views at the meeting tomorrow. The regulator had a long meeting today to prepare an analysis on the impact on rates and the industry.

As part of its recommendations, Trai, under the chairmanship of J S Sarma, had said the impact on the cost of companies would be about four to six paise a minute. Former commerce secretary Rahul Khullar now heads the telecom regulator.

The Telecom Commission had asked Trai to determine whether or not the pricing arrived at through the auction method should be valid for 10 years, not 20, though a licence should continue to be given for 20 years.

Cellular Operators Association of India Director General Rajan Mathews said, “The EGoM should go for an independent review of information submitted by industry and Trai on the whole issue around spectrum price...be it rates for consumers, the financial health of the industry or penetration of services in country, especially in rural areas"