The Telegraph
Saturday , December 8 , 2012
Since 1st March, 1999
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Spectrum base price slashed

New Delhi, Dec. 7: The empowered group of ministers (EGoM) on telecom today decided to slash the base price of spectrum by 30 per cent in four circles — Delhi, Mumbai, Karnataka and Rajasthan — that did not find any bidders in the auctions held last month.

Spectrum in the 1,800MHz band will be put up for sale in these four circles by March.

The panel also decided to auction spectrum in the more efficient 900MHz band in three circles. “Delhi, Mumbai and Calcutta will see sale of radio waves (spectrum) in the 900MHz band within this fiscal,” telecom minister Kapil Sibal said after the meeting.

The base price for this efficient spectrum is double that of the 1,800MHz band.

Sources said the EGoM did not take any decision on the road map for spectrum sale in the 800MHz band, used for CDMA technology. The November auction did not see any bidders for this spectrum. “The reserve price and auction road map policy for the 800MHz band will be referred to sector regulator Trai,” sources said, adding that the auction of CDMA radio waves may take place next fiscal.

There is also no plan to immediately auction unsold spectrum in the other circles.

Operators who own spectrum in the 900MHz band in Delhi, Mumbai and Calcutta will have to give it back and buy afresh. “While the 900MHz auction in three circles will be completed in this fiscal, these operators will have to give up the 900MHz spectrum only when their permits expire, and this begins from November 2014 onwards,” DoT officials said.

According to official data, in Delhi, Bharti Airtel and Vodafone India hold 8MHz spectrum each in the 900MHz band, while in Calcutta they hold 6.2MHz and 7.8MHz each. In Mumbai, only Vodafone holds 8MHz in the 900MHz band.

In an earlier meeting, the EGoM had decided to allow operators to retain 2.5MHz spectrum in the 900MHz band at the time of licence renewals, by paying a market-determined price.

Operators have all along opposed the entire concept of refarming, citing the increased cost of moving customers from one band to another.

The Cellular Operators Association of India (COAI) — the GSM industry body — has cited a study by consultancy firm Analysys Mason to argue that overall tariffs will go up as much as 64 paise per minute if mobile firms pass on the refarming costs to customers.

“Spectrum refarming is tantamount to forcible dislodgment of a legitimate occupant and goes against licence terms and conditions,” COAI director-general Rajan Mathews said. The COAI added that they might challenge refarming in the court.

The November spectrum sale, in the 1,800MHz band, fetched the government less than a quarter of its revenue target of Rs 40,000 crore, and found no takers for more than half the spectrum on sale.

Criticised by industry players for keeping base prices high, the Centre decided to reduce the base rates for unsold spectrum. However, industry players and analysts are apprehensive about the second round of auction fetching higher returns.

“Even 30 per cent reduction in it in these circles is unlikely to motivate the incumbents to bid for these circles aggressively. However, there might be some slots, if any, taken by incumbents as they might be in need of additional spectrum to decongest their networks,” said Hemant Joshi, Partner, Deloitte Haskins & Sells.