The Telegraph
Thursday , May 3 , 2012
Since 1st March, 1999
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Spectrum struggle intensifies

New Delhi, May 2: The country’s top four telecom firms today sought a steep cut of 80 per cent in the 2G auction base price proposed by Trai.

The chiefs of these firms made a joint pitch for the rate cut to top government functionaries, including home minister P. Chidambaram and finance minister Pranab Mukherjee, and said if the auction was held at the proposed price, mobile tariffs would go up by 25-30 per cent.

The telecom regulator has proposed Rs 18,000 crore as the base price for 5 megahertz of pan-India 2G spectrum. If prices are slashed by 80 per cent it will come down to Rs 3,600 crore, which was the base price for 5 MHz of 3G spectrum sold in 2010.

Bharti Airtel chairman Sunil Mittal, Vodafone chief executive Vittorio Colao, Idea Cellular chairman Kumar Mangalam Birla and Telenor CEO Jon Fredrik Baksaas first met Chidambaram and Mukherjee. They later met Planning Commission deputy chairman Montek Singh Ahluwalia and telecom minister Kapil Sibal.

They also met Pulok Chatterji, principal secretary in the Prime Ministers Office, besides a host of top bureaucrats, including secretaries to the department of telecom and commerce.

The telecom industry representatives made it clear to the government that it did not make “any business case” to participate in the spectrum auction at the high base prices recommended by Trai.

Norway’s Telenor, which lost its licence in the February Supreme Court verdict, said the objective of the meeting was to bring to the government’s attention the disastrous impact of the Trai auction recommendations on its ability to continue operations.

The foreign firm, which holds 67 per cent in Unitech Wireless, has already indicated that it may exit the India business if Trai recommendations are accepted without change.

“This is the time to ensure that the policy made for the telecom licence auctions allows affordability, competition and investments to remain in India,” said Baksaas.

Mittal said the regulator's proposals were “catastrophic for the industry” and “destructive”.

Telecom firms also expressed their discontent over Trai’s proposal on spectrum refarming and stringent rollout norms.

The telecom regulator, in its proposals issued last month, suggested that incumbent operators who hold the 900 MHz band must relinquish it so that it can be “refarmed”, and instead pay to acquire the 1,800 MHz band at a new base price.

The telecom chiefs said that Trai’s rollout obligations — mandating that each operator set up infrastructure in villages with a population of 2,000 — were onerous.

The Telecom Commission is expected to seek clarity from Trai on four of its key proposals. These include recommendations to auction only 5 MHz of airwaves, the method used to discover the base price, proposals on rollout obligations and refarming (distribution of airwaves in the 900 MHz band that is largely held by incumbents).

The regulator’s recommendations are not binding on the government, which has the final say on the auction modalities. The government expects to finalise the rules by May-end, with the auction likely to take place by August.