Spectrum auction faces fierce opposition

31 Jan 2013

GSM industry body the Cellular Operators Association of India (COAI) has sought a 50% reduction in reserve prices for 1800MHz spectrum in Delhi, Mumbai, Rajasthan and Karnataka, in line with the government’s decision to cut the price of CDMA spectrum. The Economic Times quotes a letter from the COAI to telecom minister Kapil Sibal as saying that the decision to cut the price of 800MHz CDMA spectrum by 50%, whilst reducing GSM spectrum fees by 30% was ‘arbitrary and discriminatory’. The COAI has also called for price reductions in all circles which have unsold spectrum, rather than limiting price cuts to the four areas that failed to attract bidders in November.

In related news the Business Standard writes that Norway’s Telenor, which currently operates under the Uninor brand but will relaunch later this year as Telewings, will not bid for spectrum in Mumbai under the current guidelines. The carrier said in a statement that the prices were still too high and expects ‘that this second round [of auctions] will be no different from the first.’ Telenor also voiced doubts regarding the seemingly preferential treatment shown to CDMA providers: ‘We are also concerned by the differential treatment between 800MHz CDMA spectrum and 1800MHz GSM spectrum. Considering that an unrealistic reserve price caused auctions to fail both of these bands in these circles, it is difficult to understand why the right decision of 50% reduction is being taken only for CDMA operators.’

Vodafone meanwhile has weighed in, challenging the guidelines for the upcoming spectrum auction illegal and discriminatory. Under the rules, Vodafone, along with other incumbents such as Bharti Airtel and Idea Cellular will be obliged to participate in the auction to renew their operating licences in the four metro circles, as their existing 900MHz spectrum holdings will be amongst those put up for sale. Vodafone argues that its existing agreement with the government grants it the right to extend its licence under mutually agreed terms. The telco added that the plans created uncertainty for operators that had invested heavily in building network infrastructure. Further, the prices were ‘arbitrarily’ fixed, in comparison to international benchmarks and the higher price tag for 900MHz spectrum – which will cost almost three times more than 800MHz – favoured one set of opeartors, Vodafone claims.

India, Telenor India, Vodafone India