DoT panel finds 'anomaly' in price formula for 700 Mhz

Trai has suggested a record base price of Rs 11,000 cr per Mhz on all-India basis

A DoT panel has found some flaw in the methodology used by regulator Trai to arrive at pan-India base price for 700 Mhz band, which suggests the already record recommended price of the premium band could be higher.

Trai in its spectrum pricing recommendations for the next auction has suggested a record base price of Rs 11,000 crore per Mhz on all-India basis.

"There are some anomalies in methodology for calculating 700 Mhz band price. The working committee (DoT) has noticed that the price of 700 Mhz band in some circles is less than 900 Mhz band. How can it happen?" an official source told PTI.

Spectrum in 700 Mhz is considered more economical for providing telephony services compared to other bands like 900 Mhz or 1800 Mhz.

The official said that the DoT committee is expected to finalise its report on the Trai recommendations in about a week which would be placed before inter-ministerial panel Telecom Commission.

The commission will give its view on spectrum auction and the final decision on the pricing will be taken by the Cabinet, the official added.

Trai has recommended spectrum pricing for seven bands, including the premium 700 Mhz frequency, for the next round of auction which could fetch the government a staggering Rs 5.36 lakh crore.

Of the Rs 5.36 lakh crore windfall, 700 Mhz spectrum could alone contribute over Rs 4 lakh crore if all frequencies are sold at pan-India base price of Rs 11,485 crore per Mhz - which is the highest price for any telecom radiowave.

The DoT committee has found that in some telecom circles, including UP East, UP West and Bihar, Trai recommended around 40% lower price for 700 Mhz band than 900 Mhz band.

Spectrum is priced on the basis of its efficiency to carry mobile signals and eco-system of device and equipment available for its usage. The lower the frequency band, the higher is its efficiency to carry long distance signals.

The cost of delivering mobile services in 700 Mhz band is approximately 70% lower than 2100 Mhz band, which is widely used for 3G services.

Trai used a formula recommended by it in April 2012 to calculate price of 700 Mhz band spectrum. The regulator had then suggested to set the price of 700 Mhz band at four times of 1800 Mhz band that was earlier used for 2G services and now fit to be used for 4G services as well.

Leading operators have requested the regulator and the government to defer sale of 700 MHz spectrum, saying that ecosystem for providing services in this band was not developed and sale would lead to underutilisation of the spectrum for several years and block industry's crucial funds.