Trai recommendations to curtail investments in telecom: GSMA

Trai has recommended base price of Rs 3,622 cr for a megahertz of spectrum at pan-India level

Global GSM operators body GSMA today said the recommendations of telecom regulator Telecom Regulatory Authority of India (Tra)i, if implemented, will curtail investments in mobile broadband infrastructure and increase prices for consumers.

"Trai's proposed reserve prices for upcoming spectrum auctions are so prohibitively high that they will inevitably curtail mobile operator investment in mobile broadband infrastructure and increase prices to consumers," GSMA said in a statement.

The Trai has recommended base price of Rs 3,622 crore for a megahertz of spectrum at pan-India level that is around 10 times higher than the price for 2G licences in 2008, when A Raja was the Telecom Minister.

According to Trai recommendations, a minimum of 5 Mhz should be allotted, which means that pan-India spectrum in 1800 MHz band will cost Rs 18,000 crore. The reserve price is five times the base price of Rs 3,500 crore for 3G auction.

GSMA said that if accepted by the government, the recommendations will also create artificial scarcity of this critical resource.

The proposals, it added, disregard international best practice in spectrum policy and jeopardise the investment of billions of dollars in new mobile infrastructure in a sector that either directly or indirectly, employs almost 10 million people.

"Efforts to squeeze money out of mobile operators for some perceived short-term gain will only reduce investment in networks, inhibit growth of mobile services and drive up consumer prices–limiting the value the public will derive from the spectrum resource in the long term," GSMA and Telecom Italia Group Chairman and CEO Franco Bernabe said.

Besides, if accepted, the proposals will not serve the interests of the broader Indian economy as it will check growth of mobile broadband, GSMA said.

"...With a 10% increase in mobile broadband penetration delivering as much as $80 billion (around Rs 3,50,600 crore) of extra revenue for India's transport, healthcare and education sectors by 2015," the statement said.

"Reducing the ability of mobile operators to invest in network upgrades and expansion would undermine the ability of India to leverage its telecom infrastructure to empower citizens and businesses," GSMA said.

GSMA also slammed Trai's recommendation on spectrum refarming, whereby existing GSM mobile service provider using 900 Mhz spectrum band could be migrated to 1800 Mhz band to provide services.