DoT sets up panel to review Trai suggestions on spectrum auction

NEW DELHI: The telecom department ( DoT) has set up a nine-member committee to examine the sector regulator’s recent recommendations on auctioning spectrum in the 800 Mhz, 900 Mhz and 1800 Mhz bands and has given it a month’s time to submit a report, according to an internal document seen by ET.

Among major recommendations submitted on Monday, the Telecom Regulatory Authority of India (Trai) suggested slashing by around 60% the base price of airwaves used by GSM operators that will be auctioned in the near future, said spectrum trading should be allowed and that a flat spectrum usage charge (SUC) be levied, instead of the one linked to the quantity of spectrum held.

According to the terms of reference, the panel headed by Anil Kaushal, member (technical) of DoT, “shall hold detailed deliberations” and may “co-opt or invite any expert or person, which, in its opinion, would be helpful”. The panel will be a“standing committee” and will continue to advise the government on the subject even after submitting its report, till a final decision is taken.

In other proposals, Trai stood firm on the controversial spectrum refarming proposal, saying operators holding spectrum in either 900 MHz or 1800 MHz bands should give up those airwaves on expiry of the licences and buy them back though auctions. It, however, didn’t offer any suggestions on the pricing of the 800 MHz band, used by CDMA operators, saying no auction is required due to the lack of demand.

The proposals have been broadly welcomed by mobile phone operators, especially the bigger players, but criticised by some companies who had bought bandwidth during the November auctions when the base price was much higher.

“The recommendations provide a major relief to the industry by reducing the spectrum reserve price and thus will have far-reaching consequences in terms of lowering the cost of spectrum renewal and the proposed one-time spectrum fee,” ratings agency ICRA said in a report. It estimated that the one-time spectrum charge would reduce by about 40% for the industry and the renewal payouts would reduce by about 50%.

Further, it said the 900 Mhz auction would see “enthusiastic participation” given that the telecom companies whose licences are expiring in November 2014 would be keen to retain their existing spectrum holding and the fact that this spectrum band has higher efficiency.

“Spectrum auction of 1800 MHz is expected to witness moderate participation as a sizeable amount of spectrum has been proposed to be auctioned,” it added.