The Telegraph
Sunday , February 23 , 2014
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Higher rate set for fresh CDMA auction

New Delhi, Feb. 22: Telecom regulator Trai today recommended auction of CDMA spectrum at a reserve price of Rs 2,685 crore per megahertz, which is around 50 per cent higher than the previous pan-India base price of Rs 1,800 crore per MHz.

The recommendations come after multiple rounds of discussions between the government and the regulator, which had earlier suggested that the auction need not be held for the 800MHz band, used by CDMA operators and 4G services, for want of takers.

However, the government had pointed out that there were buyers who were keen to bid and the airwaves should be sold at a fair price.

The department of telecom is hoping that CDMA spectrum auction this time round will attract Reliance as well as a few other players who may wish to expand services.

Only Russia’s Sistema and Tata Tele have been keen on CDMA airwaves so far. But with Tata Tele rumoured to be in talks for a merger with Vodafone, the firm is unlikely to bid in the coming auctions.

However, as the band can be used for 4G services, officials hope it would attract multiple bidders and be as successful as the 2G auctions conducted earlier this month.

“Trai recommends that the reserve price for the forthcoming auction of 800MHz spectrum should be fixed at 80 per cent of the average valuation,” the Telecom Regulatory Authority of India said.

In the March 2013 auction, the reserve price of CDMA spectrum was about 33 per cent lower than GSM spectrum in the 1800MHz band at that time.

However, a series of other recommendations by the regulator, which was earlier locked in a turf battle with the Telecom Commission, could well delay the auction by months if not years.

The telecom regulator wants the auction to be conducted in blocks of 1.25MHz. It wants to also make it mandatory for new entrants to buy at least 5MHz of spectrum, especially in contiguous blocks.

Trai has also imposed a condition that the government carve out a contiguous block of 5MHz frequency before conducting the auction.

Contiguous blocks are currently available in just 5 out of 22 service areas nationwide — Mumbai, Maharashtra, Madhya Pradesh, Assam and Northeast. The last two are not expected to attract high bids.

More blocks can be cobbled together by getting users to shift from one frequency to another in a process called ‘harmonisation’.

Telecom companies using this spectrum are likely to protest as this is a cumbersome process and could take years to work out.

Earlier, Tata Teleservices and R-Com, which hold CDMA spectrum, had told the telecom regulator that “the process of shifting (frequencies) will be much more intense as the customers will be impacted across multiple circles”.

Trai has also recommended that the entire CDMA spectrum held by MTNL be put up for auction as it is underutilised.

The regulator has also suggested that the government take back CDMA spectrum held by BSNL for auction except for a block in Jammu and Kashmir, Assam and the Northeast service area.

It wants the entire available spectrum in the 800MHz band taken back from public sector telecom firms put up for auction in one go.