Trai questions Telecom Department about quantum of spectrum to be auctioned

The Telecom Regulatory Authority of India (Trai) has sought fresh details from the Department of Telecommunications (DoT) on how much spectrum it would put in the proposed auction. In a recent combination, the regulator asked DoT why the total spectrum available as informed to Trai in January 2013 is not being proposed to be auctioned.

Trai, which is currently undertaking a consultation on what would be the price of spectrum that would be auctioned to comply with the Supreme Court's February 15 order. The apex court had asked it to auction the entire spectrum available after licence cancellation.

The regulator also asked DoT why the quantum of spectrum proposed to be put up for auction and the spectrum sold in November 2012 was less than the quantum of quashed spectrum in some services areas.

Trai warned if DoT doesn't reply to its queries, then it will go ahead with the available information (even if it is dated as of January 2013). To avoid awkwardness, the regulator has asked DoT to respond categorically as soon possible.

On July 23, the regulator issued a consultation paper on "Valuation and Reserve Price of Spectrum".

In June, the Empowered Group of Ministers (EGoM) on telecom had decided to seek fresh views from Trai on the reserve price of the spectrum to be auctioned in the 1,800-MHz, 900-MHz, and 800-MHz bands. The decision was taken as DoT or the EGoM "do not have any expertise to determine reserve price of the spectrum", Kapil Sibal, minister of communications and information technology and a member of the EGoM, had said then.

Trai will have to submit its recommendations on the spectrum pricing with 60 days.

In the last auctions, the government had given companies the option to pay upfront or in a deferred mode. In the deferred payment mode, a GSM telecom company pays 33 per cent (25 per cent for CDMA players) of the total bidding amount, with a two-year moratorium. The rest is paid in 10 equal instalments, which attract interest of 9.75 per cent.

In November 2012, the government earned Rs 9,407.64 crore by auctioning 1,800-MHz spectrum. Although it had auctioned 176 blocks (1.25 MHz each) of the 198 blocks, it recorded bidders for just 101 blocks. Due to the high reserve price, Mumbai, Delhi, Karnataka, and Rajasthan did not record any bidders. For the auction in March, the government reduced the base price for these circles by 30 per cent. It had also cut the base price of the 800-MHz spectrum 50 per cent, after it failed to attract bidders during the auction in November.

In March, only Sistema Shyam Teleservices did bid for spectrum in the 800-MHz band, that too for select circles.