TRAI stands by hike in 2G prices; tariff may rise

New Delhi: In a development that could put massive financial burden on mobile service providers, telecom regulator TRAI on Thursday stood by its recommendation of over six-fold jump in 2G spectrum prices.

TRAI had earlier this year recommended Rs 10,972.45 crore for the contracted 6.2 Mhz spectrum for pan-India licence as against Rs 1,658 crore paid by operators till the last round of allocation of licence in 2008.

The Department of Telecom (DoT) had sought clarifications from the Telecom Regulatory Authority of India (TRAI) on the spectrum pricing before finalising the National Telecom Policy 2011.

In its response, TRAI said, "...should the government decide to charge the spectrum beyond the initial spectrum (6.2 MHz) by way of amending the licence conditions, the current price would be what have been estimated by the experts..."

With regard to additional spectrum beyond the 6.2 MHz limit, each MHz of additional spectrum held by operators should cost one-time Rs 4,571.87 crore (all-India).

However, it would vary from circle to circle and the operators would have to pay only for those where they hold extra spectrum.

Most of old licences are due for renewal in the next 3-5 years and operators would have to pay as per the current prices recommended by TRAI. This would put extra financial burden on the service providers.

TRAI said its recommendations regarding cancellation of licences where roll-out obligations have not been met should be implemented and the resultant spectrum should be auctioned.

To ensure a level-playing field among operators, TRAI has recommended that if a resultant entity after merger or acquisition commands up to 35 per cent market share, the merged or acquired company would be considered in 'green line' or safe harbour.

Those with above 35 per cent but less than 60 per cent would be referred to TRAI for its recommendation. The regulator would carry out a detailed examination to ensure that there is no abuse of market dominance.

If an entity ends up having over 60 per cent market share, TRAI will not consider the particular merger or acquisition.

"The limit for spectrum holding (for such entities) would be 25 per cent of the spectrum assigned in the service area," TRAI added.

On spectrum sharing, the regulator supported said "spectrum sharing would be permitted between any two licencees holding spectrum subject to the condition that the total spectrum would not cross the permissible limit under mergers".

The permission would be for a period of five years, subject to renewal for one more term of five years, it added.

On the issue of identifying additional spectrum, TRAI said it is separately initiating an exercise to review the usage of spectrum available with the government agencies.

It is also looking at limiting auction of 700 MHz band auction initially to those not having spectrum in the 800/900 MHz band, subject to the condition that holders of the 800 and 900 MHz band would pay the market price.

TRAI has also reiterated its recommendation for a uniform licence fee of six per cent over the next four years.

On exit policy, TRAI said it would initiate a consultation process and forward its recommendations to the government in due course.