Trai suggests 10% higher price for auction based on data usage

Telecom sector regulator Trai today suggested a 10 per cent higher base price for the next round of spectrum auction in the 1800 Mhz band (2G spectrum) in view of the increasing data usage by consumers.
Telecom regulatory Authority of India recommended a price of Rs 2,138 crore per Mhz for the 1800 Mhz band.
It also suggested a price of Rs 3,004 crore per Mhz for the premium 900 Mhz band, in which mobile signal covered about twice more area than 1800 Mhz band.
It however recommended, keeping in view changing market dynamics on account of the expiry of the licences of telecom service providers (TSPs) and continuity of services for customers, that more radiowaves should be made available before conducting the auction scheduled for February 2015.

The spectrum price of the 1800 Mhz has been suggested at Rs 2,138 crore per Mhz, which is lower compared to the February 2014 auction. Government had received bids valued at Rs 2,270.4 crore per Mhz in the 1800 Mhz band in that auction earlier this year.
It said that since spectrum auction should not be conducted for Maharashtra and West Bengal service areas due to non-availability of full spectrum, the price of radiowaves that will be put for auction will come down to Rs 2,138 crore per Mhz.

However, the price recommendation would still be higher by around 10 per cent while comparing the forthcoming auction of the radiowaves in the Licence Service Areas (LSAs) with the earlier one.

This higher pricing is based on the increasing mobile Internet penetration and higher average data usage compared to the earlier period.
In the 900 Mhz band, the price of Rs 3,004 crore per Mhz is only for 18 out of 22 service area as spectrum in this band is not available in Jammu and Kashmir, Delhi, Mumbai and Kolkata service areas.
The spectrum auction is to be conducted for radiowaves in 900 Mhz held by existing telecom operators -- Airtel, Vodafone, Idea Cellular and Reliance Communications through their licences that are expiring in 2015-16.
In the 900 Mhz band, about 184 Mhz of spectrum is likely to be auctioned. In 1800 Mhz, government has proposed to auction 104 Mhz of spectrum which included spectrum held by licences that are expiring in 2015-16 and unsold airwaves in February auction.

However, government wants to keep 8.2 Mhz of spectrum as Defence band which leaves only 104 Mhz spectrum available for auction.
"The Authority recommends that the average expected valuation of 1800 MHz spectrum should be the higher of the two figures - average expected valuation based on simple mean or the price realised in February 2014 auction in each LSA," Trai said.
For 900 Mhz, Trai decided that "the value of 900 MHz spectrum in each LSA should be the lower of the two figures - average valuation of 900 MHz or twice the value of 1800 MHz spectrum".