Trai wants telcos to pay more for spectrum

Suggests tougher norms for mergers and acquisitions.

The Telecom Regulatory Authority of India (Trai) today made it difficult for mobile operators to get more spectrum and suggested a steep hike in the charges payable for this limited resource, considered the most valuable asset of any operator.

It also asked the government to take back spectrum that is not being utilised by the operators.

At the same time, Trai suggested steps to ease regulatory norms for mergers and said that there should be no cap on the number of mobile operators in India.

Trai has suggested that the price of spectrum beyond 10 Mhz should be raised substantially.

It has said that operators should fork out Rs 16 crore for every additional one Mhz of spectrum that they require beyond this cut-off bar. They should also be asked to pay Rs 80 crore as 'one time spectrum acquisition charge' in the cities of Mumbai and Delhi and other prime states.

Operators will also have to pay one per cent more, over and above the existing annual spectrum usage charge, for spectrum beyond 10 Mhz.  The regulator has suggested near-doubling the number of minimum subscribers that an operator in a metro like Mumbai needs to have before it can get additional spectrum.  For other smaller states, it said the requirement should be quadrupled. Crucially, Trai has suggested that only active connections be recognised as actual users.  In addition, the regulator said that all spectrum, excluding those bands which are already in use at the moment (800, 900 and 1,800 Mhz), should be auctioned.  This implies that all operators will now have to bid for spectrum to roll out next-generation mobile services (commonly referred to as 3G services).

The regulator said that operators should be able to pick up an equity stake of up to 20 per cent (up from the current 10 per cent) in a rival operator in the same circle on a case-by-case basis and automatically till 10 per cent.

The current cap of 15 Mhz per operator in a circle (after the merger of operators) in category A circles and 12.4 Mhz per operator in B and C circles should be removed, it has suggested.

To ensure that this does not lead to monopolies, Trai has said that mergers and acquisitions will not be allowed in circles where the number of operators falls below four.

Also, market share of the merged entity cannot exceed more than 40 per cent (at the moment it is 67 per cent based on subscriber base) both in terms of subscriber base as well as revenues.

The Trai recommendations have come nearly five months after the licensor for telecom services in India, the Department of Telecom (DoT) in the central government, had asked the regulator to go into the matter.

It now remains to be seen how many of these suggestions are actually accepted by the DoT, particularly now that it has a new minister "" A Raja "" at the helm.

Trai has also asked the government, which is solely responsible for managing spectrum for all users, including defence and space agencies, to set up a multi-disciplinary committee consisting of government and industry representatives and headed by an eminent scientist to frame a new spectrum allocation criterion.

In keeping with the requests of the industry at large, the regulator has said that there should be no cap on the number of players in each circle.

It has also said that companies like Reliance Communications (a CDMA operator) should be allowed to now launch a pan-India GSM service within the same license, but only after paying an additional Rs 1500 crore (what operators paid for a unified access service license "" UASL).

Trai has recommended that an existing licensee may be permitted to use alternate technology on payment of an entry free equal to a UASL license.

It would have to provide separate details of its subscriber base data for purpose of spectrum allocations. And of course it would have to wait in queue for the allocation.

The recommendations came under strong attack by the Cellular Operators' Association of India, which represents the GSM lobby. It claimed that industry would have to fork out over Rs 2,000 crore for 5 MHz of spectrum (Rs 500 crore due to additional revenue share and the rest as payment for spectrum).

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