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McClatchy-Tribune  08/08/2014 3:49 AM ET
Trai starts consultations to determine spectrum reserve price [Mint, New Delhi :: ]

Aug. 08--NEW DELHI -- The Telecom Regulatory Authority of India (Trai) has started consultations to determine the reserve price for the spectrum in the 900MHz and 1800MHz bands held by operators whose licences expire next year.

The consultation paper raises issues, including contiguity of spectrum, block size, valuation and reserve price of the spectrum in 900 megahertz (MHz) and 1800 MHz bands, the regulator said in a statement on Thursday.

The government expects to generate around Rs.14,000 crore from the sale of airwaves in a February auction, Mint reported earlier this week.

The consultation process will deal with the spectrum that will have to be vacated by telcos at the end of the 20-year licence validity period in 2015 and excludes the spectrum from the 800MHz and 2100MHz bands.

Trai has sought comments from stakeholders by 8 September and has set aside an additional week for counter comments. An open house discussion on the issues raised will be held on 22 September after which the telecom regulator is expected to come out with its recommendations by the end of October.

Most of the 900MHz band spectrum coming up for auction is held by incumbent operators Bharti Airtel Ltd, Vodafone India Ltd, Reliance Communications Ltd and Idea Cellular Ltd in the 18 non-metro mobile operating areas, or circles.

Some of the 1,800MHz band spectrum going on sale has been left over from the last auction held in February this year.

That auction earned the government more than Rs.60,000 crore. According to Trai, 184 MHz of spectrum in the 900 MHz band and 104 MHz in 1800 MHz band will be auctioned next year.

The government has, however, not taken a decision on the future of 800MHz spectrum after the teleom regulator had suggested that re-optimizing the CDMA airwaves for use by GSM-based network operators (extended GSM or e-GSM) be looked into.

Another auction is expected to be held in 2016, following which telcos will have to wait till 2021 for more spectrum.

The earnings from the auction are expected to help finance minister Arun Jaitley meet the 4.1% fiscal deficit target for the current fiscal year. The finance ministry has set a revenue target of Rs.45,471 crore from communication services, including spectrum auctions as well as other charges that telcos pay to operate in the country.

The receipts under the same head were Rs.40,847.06 crore in 2013-14, according to revised budget estimates.

In the last three years, the government has held three auctions for airwaves, but only the last of them is considered a success. Of the more than Rs.60,000 crore raised in the February auction, over Rs.18,000 crore would go to the exchequer this fiscal year as part of a staggered payment plan.

The earnings were more than 60% higher than the expected figure of around Rs.11,000 crore.

The government expects to sell all the spectrum becoming available in 2015 as telcos prepare for a surge in wireless data demand in the country, as well as replace the spectrum that they stand to lose because of their expiring licences.

Most analysts expect the government to retain the price discovered in the last spectrum auction, or raise the price a little to adjust for inflation. Some, however, oppose the idea.

"The last discovered price though an easy and safe option may not be in the best interest of the industry, especially as government's focus is on rural, financial and digital inclusiveness for which the telecom Industry has to play a big role," said Hemant Joshi, a partner at consulting firm Deloitte Haskins and Sells. "Therefore right pricing of spectrum with a fresh base is very critical, so that enough funds remain with the industry for increasing footprint, deploying broadband, etc. The experience of other countries in the Asia Pacific region could guide the government."


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