Don't seek to maximise spectrum price in auction, government urged

Industry chamber ASSOCHAM Thursday cautioned the government against trying to maximise price discovery for the proposed 2G and 3G spectrum auction scheduled in February.

"The bitter experience in the 2010 auction of 3G where the government gained a huge sum but telecom industry suffered a huge setback... should have been a warning," said its secretary general D.S. Rawat, noting this state of affairs was mainly due to 3G price being "unattractive" to the consumer.

The Telecom Commission Wednesday decided to send back the telecom regulator TRAI's 3G or 2100 mega hertz (MHz) spectrum price recommendations for a relook.

The Telecom Regulatory Authority of India (TRAI) had Dec 31, 2014 recommended a base price of Rs.2,720 crore per mega hertz (MHz) for pan-India 2,100 MHz or 3G spectrum, which is 22 percent lower than the previous auction.

The government in 2010 had auctioned 3G spectrum at pan-India reserve price of Rs.3,500 crore per MHz.

"The government pressing the regulator to raise the reserve price despite the bitter experience of the previous auction is bound to disturb the globally recognized success of the Indian telecom industry that was able to offer the cheapest service to the people earlier due to the government's earlier policy of keeping the spectrum charge low," said Rawat.

In December 2015, seven licences each of Idea Cellular and Reliance Communications, four licences of Bharti Airtel and six licences of Vodafone will complete their 20-year term after which they should be renewed.

The TRAI has set a price of Rs.3,004 crore per mega hertz for in the 900 MHz and 1800 MHz bands to be auctioned in 18 service areas for the more efficient 900 Mhz band and Rs.2,138 crore per mega hertz for the 1,800 MHz band for the February auction.

In the 1,800 MHz band, 20 circles are going for auction, while in the 900 MHz band 18 circles will be up for sale.The revenue target from spectrum auction set by the government in the 2014-15 budget is Rs.45,471 crore.