The Commerce Minister, Mr Anand Sharma, has raised concerns against the TRAI proposals on 2G spectrum.
In a communication to the Finance Minister, Mr Pranab Mukherjee, Mr Sharma said that the recommendations, if implemented, could impact mobile tariffs and affect investments in the telecom sector.
Mr Sharma's views assume significance as he is part of the Empowered Group of Ministers, which will take a final decision on the spectrum allocation policy.
The telecom regulator had proposed fixing the reserve price for 2G auction at over Rs 18,000 crore which, according to the Minister, is on the higher side.
“It appears that the TRAI recommendations for both in the 800/900 Mhz band as well as the 1800 Mhz band are nearly 70-80 times more than the prevailing price in all countries of the developed world. This will surely limit the participation in auction and have major implications for tariffs,” Mr Sharma said in his letter to the Finance Minister.
While operators and analysts have opposed the TRAI proposals, this is the first time a senior Cabinet rank Minister has expressed objections.
On the proposal to re-farm 900 Mhz spectrum band, the Commerce Minister said this will not only require huge investments in new infrastructure but also make current investments of Rs 1 lakh crore redundant.
“At this juncture, we can ill-afford to have regulatory uncertainty in a sector as crucial as telecom, which has catalytic growth impact for the entire service industry, including IT,” Mr Sharma said adding that shifting operators from 900 Mhz band could also impact rural coverage.
He added that Indian banks have huge exposure in the telecom industry and any disruption will have adverse implications on the banking industry. “The Ministry of Telecom must examine these recommendations with prudence and caution,” the Minister stated.
Mr Sharma's views contradict the stand taken by the Department of Telecom, which has backed TRAI's proposal to fix a high reserve price. An internal committee set up by the DoT to examine the TRAI proposals has suggested a further increase in the base price.
While the Telecom Commission is meeting on Thursday to discuss the proposals, the Commerce Ministry's stand makes the GoM proceedings interesting.