TRAI for not auctioning 2G spectrum

Virtually endorsing the Telecom Ministry's decision not to auction 2G spectrum two years ago, telecom regulator TRAI today said bidding out mobile spectrum would not have yielded major economic gains for the exchequer.

"It is not feasible to subject the spectrum in 800-900 -1800 Mhz band to auction process, considering that the amount of spectrum after meeting the obligation of contracted spectrum is very limited and the number of claimant for additional spectrum would be extremely few," TRAI Chairman JS Sharma said.

The Telecom Ministry's decision to sell 2G spectrum in 2008 at 2001 prices had become the subject of a major controversy, with the Opposition parties alleging a scam that cost the government Rs 60,000 crore.

The telecom regulator today released its recommendation report on spectrum allocation and pricing.
    
TRAI also suggested that from now 2G spectrum (radio waves) could be priced on par with what is discovered through the 3G spectrum auction and also delinking the sale of spectrum from issue of licence, as is the current practice.
    
Sarma added: "The authority is conscious of the fact that there are several views about deriving the true price of 2G spectrum and keeping this in view the authority is separately initiating an exercise to further study the subject and would apprise the government later, but for the present the authority recommends that 3G prices could be adopted as the current price of 2G spectrum."
    
Telecom Minister A Raja's decision to allocate mobile licences with 4.4 Mhz of 2G spectrum at a price of Rs 1,651 crore to a host of companies that included realty player Unitech Wireless, Videocon, Swan, prompted the allegations of corruption.
    
Consequently, the CBI was roped into to look into the allocation of giving away spectrum at rates much below the market price.
    
Raising the quantum of minimum amount of spectrum (contracted amount of 6.2 Mhz to the operators), the regulator said: "All the spectrum beyond 6.2 Mhz will have to be paid for at the current market price (linked to 3G price) by GSM operators and for the CDMA operators the spectrum assigned beyond the contracted amount of 5 Mhz will have to be paid for."
    
Dealing a big blow to several existing operators like Bharti Airtel, BSNL and Vodafone Essar, the regulator said the service provider will have to pay an additional one time charge for the spectrum they hold beyond 6.2 Mhz, which will be paid at the current price of spectrum upto 8 Mhz and after that it will be charged at 1.3 times the current price.
    
This would mean existing operators would have to 3G rates for spectrum they hold above 6.2 Mhz.
    
The Big three players -- Bharti Airtel, Vodafone and BSNL -- hold around 10 Mhz spectrum in many key circles.