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TRAI chews out DoT over 3G spectrum plans

16 Jan 2015

The Telecom Regulatory Authority of India (TRAI) has dug in its heels and refused to alter its recommendation for the pricing of 3G spectrum, criticising the government and the Department of Telecommunications (DoT) for its handling of auction. The Economic Times writes that the TRAI lambasted the DoT, attacking its decision to only auction a fraction of the 3G spectrum and to tag the price of 2100MHz 3G spectrum to the 2010 sale. A statement from the watchdog explained that the DoT’s measures would actively harm the market rather than aid its development: ‘The auction will not maximise revenue proceeds. More seriously, it cannot promote rollout because resources for investment in networks will just not be available… rather than stimulate competition the auction may end up restricting it.’

The TRAI accused the DoT of being ‘totally and irrevocably wedded to the 2010 prices,’ after a DoT committee stated that the reserve price for the airwaves should be indexed to the auction-discovered price of the 2010 sale. The regulator had proposed a base price of INR27.2 billion (USD493.2 million) per MHz of pan-India 2100MHz spectrum, but the DoT is arguing for a valuation of INR38.99 billion. The TRAI went on to note that the 2010 prices are ‘irrelevant’ as more than a year had passed since the sale, adding that ‘if the reserve price pre-decided, then it was futile to seek the authority’s recommendation.’

Meanwhile, the TRAI also warned against the decision to auction just 5MHz of 2100MHz airwaves per circle in the upcoming auction and to hold a second tender later this year to sell off a further 15MHz per circle, saying the limited amount of spectrum would needlessly inflate the cost of the frequencies and allow only the operators with the deepest pockets to compete: ‘In a supply-constrained situation, it is unlikely that the discovered price can be fairly termed a market-determined price…The whole purpose of clubbing 2100MHz band spectrum along with spectrum of other bands will be defeated.’

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