Trai should determine spectrum pricing by Dec 31 every year: DoT panel

A panel set up by the Department of Telecommunications (DoT) has recommended that Telecom Regulatory Authority of India (Trai) should review and finalise spectrum pricing by December 31 every year, to determine the market price for the following fiscal.

In February, Trai had suggested that the cost of start-up spectrum should be priced at 53 per cent of the 3G auction price and extra airwaves held beyond the contracted limit of 6.2 MHhz at 136 per cent of the auction price held last year. If spectrum pricing is reviewed every 12 months, Trai is of the opinion that the price discovered in the most recent auction should be taken as the base price.

“Trai may recommend the current price for GSM and CDMA spectrum — contracted and beyond every year by December 31, which will be valid for the next financial year,” the panel said in its report. Till now, additional spectrum to mobile players was given on the basis of its subscriber base.

The report suggested that the market price should be determined by future auctions and not by modifying the estimated price that experts had suggested for 2010, based on future auctions retrospectively.

“The determination of market price through auction of 2G spectrum may take more time due to non-availability of spectrum. In view of this, Trai may reconsider the current price recommended,” said the report.

DoT’s panel, which was set up to look into the recommendations of Trai on spectrum management and licensing issues, has in-principle accepted most suggestions of the telecom regulator, including pricing of spectrum based on rates discovered through auctions, mergers and acquisitions norms as well as rollout obligations besides delinking of spectrum from license.

This report will be tabled before the Telecom Commission, the highest policy making body of DoT, in July. Subsequently, major policy changes will be referred to the Cabinet for a final decision.

The expenditure for vacating spectrum should be met from the consolidated fund of India according to the existing practice, the report said. However, Trai had recommended that a specific fund of refarming should be created and 50 per cent of the realisation from all proceeds from spectrum, including auction proceeds and spectrum usage charges, should be transferred to this fund.

The report said Trai should also recommend criteria for allocation of spectrum in 1,800MHz on extension of licenses in case 1,800MHz is not sufficient to meet the requirement of all licenses. The regulator had said on renewal of licenses, operators with 900 MHz spectrum should be replaced with 1,800 MHz. In case, 1800 MHz was not available, operators should be temporarily allowed to retain 900MHz. But, when 1,800 MHz was available, the operators should be given six months to to give back the 900MHz spectrum.