Stakeholders oppose spectrum auction

The method of spectrum allocation, spectrum pricing and efficient utilisation dominated the deliberations of the Telecom Regulatory Authority of India's (TRAI) open session on spectrum-related issues.

In its first open session on spectrum-related issues held by the TRAI in Bangalore on Friday, stakeholders from the telecom industry expressed their opinions on how the regulator could facilitate for provision of the much-needed spectrum to provide better services to subscribers.

Speaking to Business Standard, Pradip Baijal, chairman, TRAI, said, "Spectrum is a scarce resource. We are taking opinions from stakeholders before making our recommendations to the government on the issue to ensure that an issue like spectrum does not hamper the growth of the industry in the future. Though there is divided opinion on certain issues like method of allocation, we will have to take into consideration the opinion of the industry and try to arrive at a consensus of the industry before drafting our recommendations to the government."

The stakeholders were mainly divided on whether to put up the available spectrum on auction or continue with the existing revenue-based mechanism. In the revenue-based mechanism, various slabs are fixed beforehand, based on the amount of spectrum allocated to the operator. These charges include 2 per cent of operators' revenues for 4.4 MHz, 3 per cent for 6 MHz, 4 per cent for 8 MHz, 5 per cent for 10 MHz and 6 per cent for 15 MHz.

Currently, spectrum charge is being paid on a revenue sharing basis and not per MHz. While there was a consensus on not paying per MHz, some stakeholders did prefer the auction-based pricing mechanism as it would filter efficient operators from inefficient ones. Most stakeholders agreed that spectrum did not have a significant role to play in spreading tele-density, especially in the rural areas where use is minimal. As these areas are not densely populated and lack constant movement, one transmission tower can take care of their needs of an entire village, the stakeholders said.

Terming spectrum as the most important raw material that determines the price of a telecom product, Rajendra Singh, advisor, TRAI, said. "Several stakeholders were also of the opinion that the revenue sharing percentages fixed for various spectrum should be reduced further. In our estimates, a minimum of 6.2 MHz of spectrum is currently available to any operator, anywhere in the country."

Singh said that the issue of pricing for existing operators becomes relevant only when they seek additional spectrum. "As a result, we deliberate on how to go about the entire process of allocation and pricing," he added.

Operators also said that spectrum was currently being provided on the basis of the city in which they operate and not the entire circle. "By providing a consistent frequency for the entire circle, we will be able to provide better services for up-country customers. This will also significantly reduce our infrastructure costs," said a stakeholder.