New norms will raise rates 5-10 p only: Trai

NEW DELHI: The Telecom Regulatory Authority of India ( Trai) on Thursday told the government that its recommendations on spectrum pricing will push up call charges on average by only 5-10 paise, amid indications that the Empowered Group of Ministers (EGoM) will go with the regulator’s suggestion on fixing the reserve price for spectrum.

Sources said Trai chairman Rahul Khullar’s presentation to the ministerial panel headed by home minister P Chidambaram was in sharp contrast to the telecom industry’s claims that, if implemented, the regulator’s recommendations would almost double tariffs. Khullar’s predecessor J S Sarma, who had submitted the recommendations just before demitting office, had estimated that the impact could at best be 4-6 paise at its peak.

The first meeting under Chidambaram was informed of the anxiety to take a decision on reserve price and other important issues soon. Sources familiar with the deliberations said the ministerial panel plans to finish the job by early next week so that it can convince the Supreme Court of the sincerity of its purpose.

Trai was asked by the government to assess the impact of the recommendations on the consumer, government finances and corporate profitability, after the regulator held that the reserve price for 5 MHz spectrum in the 1800 MHz band be fixed at Rs 18,100 crore, compared to Rs 1,650 crore charged by former telecom minister A Raja in 2008.
Besides new entrants, the reserve price will also be applicable to existing operators when they move for renewal of their licences.

They have been lobbying hard with the government to reject the recommendation for reserve price by championing the interest of the consumer.

Sources said the EGoM assessed the political fallout of the tariff hike, especially the possibility of rise in per minute call charges being higher than what Trai has estimated. The hike will be higher for the consumer in metros such as Delhi, while the one in Andhra Pradesh will feel the least burden.

Although a considerable part of the three-hour meeting was spent on discussing the reserve price, sources said the government did not appear to be keen to tinker with Trai’s suggestions, fearing that it would again be accused of favouring the industry at the exchequer’s expense. There were suggestions that the government go along with the Trai formula and it should review the reserve price for auction only in the absence of interest from bidders.

Communications minister Kapil Sibal told reporters after the meeting that some of the issues had been resolved . “Some issues have been decided and some (issues ) will go to the Cabinet. Pricing and other such issues will be decided by us (EGoM),” Sibal said, adding that the group will meet again on Monday or Tuesday . Sources said the ministerial panel was keen that all issues were thrashed out at the earliest so that the government could move Supreme Court to seek an extension of deadline for completing spectrum auction beyond August 31.

PRICING SPECTRUM

First EGoM under P Chidambaram met under pressure to take decision on reserve price soon, plans to finish job next week

Trai’s presentation to ministerial panel differed from telcos’ claims that new spectrum norms would almost double tariffs

EGoM is wary of political fallout of any tariff hike, which is expected to be higher for consumers in metros