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TRAI issues 2G pricing recommendations

The Telecom Regulatory Authority of India (TRAI) has released recommendations on spectrum valuation, reserve price for licences expiring in 2015-16. It has recommended to auction only spectrum held by service providers in 900 mega hertz and says that the department of telecom should take a completely fresh look at the implementation of E-GSM band.

The reserve price for the 900 and 1800 MHz band spectrum has been hiked by the TRAI by approximately 10 percent. This move is on the back of increased data penetration. Also, according to a TRAI analysis, the data revenues flowing across circles have seen as much as 100 percent increase.

“The focus is on making spectrum available and the recommended action plan is to ensure contiguity of spectrum”, TRAI Chairman Rahul  Khullar said. He further added that telecom players should be allowed swap spectrum holding. The availability of spectrum will be assessed by the finance minister, telecom minister and defence minister, he said.

As far as the size of the blocks is concerned, TRAI has recommended 2×200 kilo hertz of spectrum block to be put up for auction in each of the telecom circles. But the TRAI chairman was quick to point out that it is not the issue of pricing or the block size that is critical in the upcoming auction spectrum auctions, which are scheduled to be held in February.

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He said that issue of availability of spectrumis critical because as far as the 900 MHz band spectrum is concerned, at the least companies such as Bharti Airtel , Vodafone and  Idea are going to be under immense pressure in circles where their licenses are coming up for renewal because of spectrum that they are presently holding is the only amount of spectrum that is available to be auctioned hence the TRAI has pressed on the government to make more spectrum available.

Welcoming TRAI’s recommendations, Rajan Mathews, DG, COAI said that 2100 MHz band is lying unused with the defence ministry and the PMO should intervene to vacate spectrum tied up by defence.

“Dr Khullar has done an excellent job in looking at the situation on the ground. The fundamental proposition from the industry is that if you are going to have fair and transparent auction then you must ensure that there is no artificially constraint spectrum available. As opposed to previous auctions where there was a fall back position through 1800 MHz, in the present auction there is no fall back provision in terms of adequate amount of an alternative 1800 spectrum which is why the chairman has insisted that there must be 2100 spectrum available, 800 also be put up. Hopefully, any additional spectrum that might come from BSNL holdings which are unused at present,” he told CNBC-TV18 in an interview.

Sanjay Kapoor, Former CEO, Bharti Airtel also feels that TRAI has recognised the issue of paucity of spectrum in the sector. Speaking to CNBC-TV18 he said that the entire spectrum that is not being utilised should be auctioned and liberal spectrum sharing policies must be put on the table. “We need public-private-partnership (PPP) to roll out fibre to change broadband landscape,” he added. According to Kapoor, the telecom industry is too fragmented and needs consolidation.

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