TRAI to make recommendations for spectrum reserve price: Sibal

A high powered ministerial panel Wednesday decided to refer the issue of spectrum reserve price for the forthcoming auction to telecom regulator TRAI and asked it to give recommendations within 60 days.

Updated: Jun 26, 2013, 21:29 PM IST

New Delhi: A high powered ministerial panel today sought telecom regulator TRAI's opinion on the start or reserve price to be set for forthcoming spectrum auction.

The Telecom Regulatory Authority of India (TRAI) has been asked to give its recommendation within 60 days.

"It was decided that on the issue of reserve price the matter should be referred to TRAI and we would request the Trai to give its recommendations before the end of 60 days because government is very keen to move forward and sell the spectrum," Telecom Minister Kapil Sibal told reporters here.

The Department of Telecom (DoT) is required to conduct third round of spectrum auction in 20 out of 22 service areas to comply with the Supreme Court order of February 15, 2013.

The DoT is learnt to have planned to auction all the spectrum- 800 Mhz (CDMA), 900 Mhz (GSM) and 1800 Mhz (2G GSM), in the third round that were put up for auction in March 2013 but remained unsold.

Sibal added that after receiving the recommendations, the Empowered Group of Ministers (EGoM) will meet to fix the reserve price so that spectrum in all bands can be sold.

"...As and when the Trai makes a recommendation, the EGoM will meet and fix the reserve price and move forward so that all spectrum in all bands should be sold," Sibal added.

As per initial recommendation of Trai in April 2012, the base price of pan-India 5 megahertz of spectrum amounted to Rs 18,200 crore, which was around 10 times high than the amount paid by telecom companies in 2008 for the same.

The key issue at the EGoM meeting was price for spectrum in premium 900 megahertz which was is fixed at two times higher than that for 1800 Mhz as per recommendation of TRAI. This band is said to provide almost double signal coverage than by signals transmitted in 1800 Mhz band.

The Cabinet has earlier this year approved reduction of 30 percent reserve price for GSM spectrum (1800 Mhz band) fixed for November 2012 auction. The final reserve price for unsold airwaves in Delhi, Mumbai, Karnataka and Rajasthan cumulatively amounted to Rs 11,876 crore.

Sources privy to discussion in the meeting said Finance Minister P Chidambaram, External Affairs Minister Salman Khurshid and Sibal favoured the EGoM deciding on spectrum price. However, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Information and Broadcasting Minister Manish Tewari were for sending the matter to TRAI, they added.

Ahluwalia had already communicated his views to Sibal in a letter on April 1 of sending the pricing matter back to TRAI as last two auctions held in November 2012 and March 2013 did not show good result.

Defence Minister AK Antony after discussion agreed to send the matter to Telecom Regulatory Authority of India.

The decision to send the matter to TRAI brings cheers for GSM telecom operators like Airtel, Vodafone and Idea Cellular as it may give some more time to these players in spectrum refarming.

TRAI has recommended "renewal of licenses must be made at least 30 months in advance of the expiry of licenses" and premium 900 Mhz band should be auctioned "at least 18 months in advance" so that in case new players win the airwaves, he should be ready with the deployment plans.

GSM industry body COAI Director General said: "The decision will pave way for a 'robust and exhaustive' consultative mechanism in arriving at the right reserve price which will fuel further growth of the Indian mobile telephony sector."