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India suggests 60 percent cut in 2G auction price

Telecom Regulatory Authority of India recommends cutting the reserve price of future 2G auctions by up to 60 percent, with a pan-India 1800MHz license pegged at 14.96 billion rupees (US$231.74 million).
Written by Eileen Yu, Senior Contributing Editor

India's telecommunications regulator has recommended cutting the base price of future 2G auctions by up to 60 percent.  


The Telecom Regulatory Authority of India (TRAI) also suggested spectrum trading be permitted and that there should be a flat fee for spectrum usage, rather than one linked to the quantity of spectrum owned, according to a report Tuesday by The Economic Times

The regulator, however, held the ruling for operators--in a refarming proposal--with either 900MHz or 1800MHz spectrum to release the airwaves and repurchase them through auctions. It recommended the base price for a pan-India 1800MHz band spectrum be tagged at 14.96 billion rupees (US$231.74 million), about half the previous price set during the March auction of 28 billion rupees. The auction was scraped due to low interest among telcos which said the reserve price was too high. 

TRAI also suggested a base price of 1.75 billion rupees for Delhi spectrum and 1.65 billion rupees for Mumbai, which are 55 percent to 57 percent lower than prices set in March. But it remained mum on the pricetag for CDMA, or 800MHz spectrum, according to The Economic Times report.

Rajan Matthews, director-general of Cellular Operators Association of India, said in the report its member-GSM operators were "relatively pleased" with suggested base price for 1800MHz spectrum. A spokesperson with a CDMA operator, though, highlighted the lack of clarity regarding its expansion plans amid TRAI's silence on 800MHz pricing.
"The recommendations are in line with the requirements of the multiple stakeholders in the industry," Sanjay Kapoor, former chief executive of Bharti Airtel's India and South Asia operations, told The Economic Times. "A flat rate spectrum usage charge [and] spectrum trading are all steps in the right direction." 

TRAI's recommendations would still need to be approved by India's Department of Telecoms (DoT).

The announcement comes after two failed auction bids, including another last November, due to high pricepoints but which could bring in much-needed revenue for the Indian government, which is aiming for a fiscal deficit of 4.8 percent of GDP. 

Telcos have been critical of the country's management of 2G spectrum. Vodafone in February accused the Indian government of "unjust enrichment" and asked that the spectrum it had successfully bid for in the November auction be immediately allocated. 

The government also rejected appeals filed by four operators including Russian conglomerate Sistema and India's Tata Teleservices to reinstate their 2G licenses, which were revoked in the 2012 auction scandal

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