The Telecom Regulatory Authority of India is firm on its stand of lowering the reserve price for spectrum auction by 60 per cent. It also justified its recommendation to not hold auction for CDMA operators as well as fixing a flat annual fee for using spectrum.
TRAI had proposed reducing the reserve price from the earlier recommended Rs 18,110 crore to Rs 7,480 crore for 5 Mhz pan-India spectrum in the 1800 Mhz band. A panel appointed by the Department of Telecom had earlier said that the reserve price proposed by TRAI did not reflect the value of the spectrum keeping in view the growth potential and projections in the telecom sector. The panel’s report was sent to TRAI by the Telecom Commission seeking a review.
In its response to the Commission, TRAI said, “The methodologies used by the Authority are grounded in economic theory and have widespread international acceptance. There is no scope at all for the Authority to ‘reconsider’ the reserve price.”
Flat charge
The DoT panel had also rejected TRAI’s recommendation to introduce a flat charge for using spectrum instead of the existing slab-based system wherein operators with larger amounts of spectrum have to pay a higher charge ranging between 3 and 8 per cent of the annual revenues.
While TRAI had said that all operators should pay 3 per cent of their annual revenues for using the spectrum, the panel had said that this would go against the rules specified at the time of auctioning broadband spectrum in 2010. Players that won broadband spectrum were told then that they would have to pay only one per cent of their revenues for using the airwaves.
Explaining the rationale for proposing a flat spectrum charge, TRAI said that technological changes now allow broadband players to also offer voice, therefore, collecting a lower charge from them would be unfair to other telecom companies.
TRAI said that if the DoT was concerned about changing the rules of the broadband auction then the charges for all players could be brought down to 1 per cent.
“The benefits of a graduated transition to a uniform rate are that it will not only simplify the levy structure but will also enable the policy initiatives on merger acquisition, sharing and spectrum trading to be implemented without any inherent disincentives,” TRAI said.