The Empowered Group of Ministers (EGoM) headed by Finance Minister Pranab Mukherjee could not take any decision on the contentious issue of spectrum pricing at its meeting today evening.
Emerging from the meeting, which went on for almost two hours, Law Minister Salman Khurshid said the Telecom Regulatory Authority of India (Trai) did not make any presentation to the EGoM on spectrum pricing.
And sources indicated that the Trai is also yet to submit its analysis on the impact of spectrum pricing on tariffs and viability of telecom operators and this could perhaps be another reason why no decision on pricing was taken today.
Trai has stuck to its pricing recommendation of Rs 3,622 per mhz of 2G spectrum (or 1,800 mhz band), a recommendation which has been slammed by all telecom operators.
A report by NDTV Profit said that the EGoM did decide that a minimum of 10 megahertz of spectrum would be auctioned in each circle and that the maximum spectrum to be auctioned would be 13.75 mhz so that two players can bid. If true, this decision will dilute the charge levelled by telecom operators that the government was hoarding spectrum.
Emerging from the meeting, Telecom Minister Kapil Sibal said, “Some decisions have been taken, we will let you know by and by.”
The NDTV Profit report also said that a decision has been taken to go ahead with refarming of spectrum. If the more efficient 900 mhz spectrum is refarmed, which means taken away from incumbent operators who will have to get the less efficient 1,800 mhz spectrum at new prices, it could mean a significant cost burden for the industry.
According to CNBC TV-18, the meeting has decided on which blocks of spectrum to offer and the schedule for the auction also. It also quoted sources to say “some eight blocks of spectrum will be auctioned definitely in the first phase of auctions for the 1,800 Mhz band in which some of the operators whose licences were cancelled will also be bidding.”
But the crucial decision of spectrum pricing has been deferred.
Trai recommended the base price for 2G auctions which is roughly 10 times the price in 2008.
After widespread protests on this kind of pricing, the Telecom Commission had asked Trai to submit, circle-wise, the possible impact of spectrum pricing, impact on new and old telecom operators who wanted to convert their old spectrum to a liberalised version that allows them to use it for multiple services. It is this analysis which Trai has not submitted till today.
Interestingly, the new Trai chairman Rahul Khullar has defended the pricing math suggested by his predecessor JS Sarma to the Joint Parliamentary Committee in the last few weeks.
The Trai report was also supposed to take into account if telecom companies will fully absorb the rise in spectrum price or pass it on to consumers. Telecom operators were also asked to send in their suggestions.
The Telecom Commission had also sought Trai’s view on whether pricing should be for 10 years initially given rapid changes in the technology. It had suggested that a licence be given for 20 years, while price could be re-evaluated after 10 years.
The telecom regulator had earlier announced new guidelines for the auction of telecom spectrum, drawing sharp criticism from telecom operators.
In its recommendations, Trai had fixed the reserve prices for the auction of spectrum for 900 MHz was fixed at Rs 7,244 crore, while that for 1,800 MHz was fixed at Rs 3,622 crore.
The prices is estimated to be 10 times higher than what was fixed during the first round of spectrum allotment in 2008 under the then telecom minister A Raja.
Telecom companies have claimed that this reserve price is too high, and that buying spectrum at the new prices will result in a 100 percent hike in charges for consumers.
Trai had also recommended that it should be entrusted with the task issuing unified licences, and that a one-time non-refundable fee of Rs 15 crore should be levied for a national-level licence.
The auction of spectrum is being held at the behest of the Supreme Court, which in February 2012 cancelled 122 telecom licences and directed the government to hold an auction for spectrum, saying the allotment in the first round had been discriminatory.
The case also led to former telecom minister A Raja to be arrested for allegedly showing undue favour to some telecom companies. He was released on bail last month after being held in custody for 15 months.
Emerging from the meeting, which went on for almost two hours, Law Minister Salman Khurshid said the Telecom Regulatory Authority of India (Trai) did not make any presentation to the EGoM on spectrum pricing.
And sources indicated that the Trai is also yet to submit its analysis on the impact of spectrum pricing on tariffs and viability of telecom operators and this could perhaps be another reason why no decision on pricing was taken today.
Trai has stuck to its pricing recommendation of Rs 3,622 per mhz of 2G spectrum (or 1,800 mhz band), a recommendation which has been slammed by all telecom operators.
A report by NDTV Profit said that the EGoM did decide that a minimum of 10 megahertz of spectrum would be auctioned in each circle and that the maximum spectrum to be auctioned would be 13.75 mhz so that two players can bid. If true, this decision will dilute the charge levelled by telecom operators that the government was hoarding spectrum.
Emerging from the meeting, Telecom Minister Kapil Sibal said, “Some decisions have been taken, we will let you know by and by.”
The NDTV Profit report also said that a decision has been taken to go ahead with refarming of spectrum. If the more efficient 900 mhz spectrum is refarmed, which means taken away from incumbent operators who will have to get the less efficient 1,800 mhz spectrum at new prices, it could mean a significant cost burden for the industry.
According to CNBC TV-18, the meeting has decided on which blocks of spectrum to offer and the schedule for the auction also. It also quoted sources to say “some eight blocks of spectrum will be auctioned definitely in the first phase of auctions for the 1,800 Mhz band in which some of the operators whose licences were cancelled will also be bidding.”
But the crucial decision of spectrum pricing has been deferred.
Trai recommended the base price for 2G auctions which is roughly 10 times the price in 2008.
After widespread protests on this kind of pricing, the Telecom Commission had asked Trai to submit, circle-wise, the possible impact of spectrum pricing, impact on new and old telecom operators who wanted to convert their old spectrum to a liberalised version that allows them to use it for multiple services. It is this analysis which Trai has not submitted till today.
Interestingly, the new Trai chairman Rahul Khullar has defended the pricing math suggested by his predecessor JS Sarma to the Joint Parliamentary Committee in the last few weeks.
The Trai report was also supposed to take into account if telecom companies will fully absorb the rise in spectrum price or pass it on to consumers. Telecom operators were also asked to send in their suggestions.
The Telecom Commission had also sought Trai’s view on whether pricing should be for 10 years initially given rapid changes in the technology. It had suggested that a licence be given for 20 years, while price could be re-evaluated after 10 years.
The telecom regulator had earlier announced new guidelines for the auction of telecom spectrum, drawing sharp criticism from telecom operators.
In its recommendations, Trai had fixed the reserve prices for the auction of spectrum for 900 MHz was fixed at Rs 7,244 crore, while that for 1,800 MHz was fixed at Rs 3,622 crore.
The prices is estimated to be 10 times higher than what was fixed during the first round of spectrum allotment in 2008 under the then telecom minister A Raja.
Telecom companies have claimed that this reserve price is too high, and that buying spectrum at the new prices will result in a 100 percent hike in charges for consumers.
Trai had also recommended that it should be entrusted with the task issuing unified licences, and that a one-time non-refundable fee of Rs 15 crore should be levied for a national-level licence.
The auction of spectrum is being held at the behest of the Supreme Court, which in February 2012 cancelled 122 telecom licences and directed the government to hold an auction for spectrum, saying the allotment in the first round had been discriminatory.
The case also led to former telecom minister A Raja to be arrested for allegedly showing undue favour to some telecom companies. He was released on bail last month after being held in custody for 15 months.