FICCI voices concern over telecom spectrum prices

Ahead of the telecom spectrum auction in March, the industry chambers have expressed their concerns over the steep reserve price of various airwaves and said high prices will lead to major impact on growth and expansion of quality networks in coming years.

"The reserve prices for the proposed auction in the 900 MHz band in 18 service areas and 800 MHz band for pan-India spectrum has been increased by 32.5 percent and 17.5 percent respectively over the reserve prices recommended by TRAI around only two months ago in October-November 2014," industry body Federation of Indian Chambers of Commerce and Industry wrote in a letter to Communications and IT Minister Ravi Shankar Prasad.

A copy of the letter is available with IANS. TRAI is Telecom Regulatory Authority of India.

"The reserve prices for these bands recommended by TRAI were already too high, and a further escalation in the prices is completely unreasonable. Such steep increases would lead to major impact on growth and expansion of quality network in coming years and adversely impact the consumers as well national vision of faster broadband for all and Digital India initiatives," the letter stated.

The total spectrum put to auction is 103.75 MHz in 800 MHz band, 177.8 MHz in 900 MHz band and 99.2 MHz in 1800 MHz band -- a total of 380.75 MHz in 800, 900 and 1800 MHz. It will also put on sale 5 MHz in the 2100 MHz band, which is used for 3G services in 17 out of 22 telecom areas.

The reserve price approved is Rs.3,646 crore pan-India per MHZ in 800 MHz, Rs.3,980 crore for 900 MHz band pan-India excluding Delhi, Mumbai, Kolkata, and Jammu and Kashmir; and Rs.2,191 crore pan-India (excluding Maharashtra and West Bengal) in 1800 MHz band, the ministry said earlier.

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

The estimated revenues from this auction are Rs.64,840 crore (excluding 2100 MHz spectrum) of which Rs.16,000 crore is expected to be realised in the current financial year (2014-15). The revenue target from spectrum auction set by the government in the 2014-15 budget is Rs.45,471 crore.

Earlier this week, the government approved a reserve price of Rs.3,705 crore per megahertz (MHz) for third generation (3G) spectrum. Government has said only 5 MHz of 3G or 2100 MHz band will be auctioned.

"Releasing of only 5MHz of spectrum will lead to artificial scarcity, which will not only lead to pushing the prices upwards wherein the operators will be forced to shell out inflated amounts for bidding in order to sustain their businesses, but will hurt the growth of mobile broadband services," the letter written by FICCI said.