New rates and rules for spectrum are welcome
After slashing the reserve prices, in places by as much as 60 per cent, TRAI wants to bring bidders back to the table they had deserted.
By ET Bureau |
Telecom regulator TRAI has sensibly slashed the floor price of spectrum which will be auctioned sometime later this year. While the recommendation to allow spectrum to be traded is welcome, restricting it to outright sale is not.
Why constrain technological or commercial innovation in spectrum sharing? India’s mobile market is probably the most diversified in the world, with nearly a dozen players jostling for customers in 22 circles. This hyper-competitiveness has driven telecom talk charges to their lowest levels worldwide, but combined with the high prices paid in auctions for 3G bandwidth, they could also drive some players into bankruptcy.
The TRAI’s new recommendations, which lower the bar on spectrum charges as well as trade, will bring relief to the industry. For the last three years, telecom has been in the eye of a storm sweeping through India. What began as allegations of graft while allotting spectrum during the tenure of minister Andimuthu Raja, grew into a full fledged conflict between the executive and the judiciary. This culminated in a judgment, in February last year, through which the Supreme Court scrapped all 122 new licences issued by the UPA I regime and ordered that these should be auctioned. By then, the government was cowering under the scrutiny of the judiciary and anti-graft protests on the streets.
Taking no chances, it set reserve prices for spectrum auctions at levels so astronomically high that nobody could accuse it of doing any favours for industry. Indeed, as the TRAI’s Monday note makes clear, the astronomical reserve prices drove away bidders not once, but twice. In the second round of auctions, only one player bid for one circle, that too, after a 50 per cent cut in the price.
After slashing the reserve prices, in places by as much as 60 per cent, TRAI wants to bring bidders back to the table they had deserted. Allowing trade in spectrum, without restrictive conditions on the kind of sale that would be allowed, among operators will only add to the attractiveness of the new auctions.
Telecom could, once again, become the blue eyed sector for investors.
Why constrain technological or commercial innovation in spectrum sharing? India’s mobile market is probably the most diversified in the world, with nearly a dozen players jostling for customers in 22 circles. This hyper-competitiveness has driven telecom talk charges to their lowest levels worldwide, but combined with the high prices paid in auctions for 3G bandwidth, they could also drive some players into bankruptcy.
The TRAI’s new recommendations, which lower the bar on spectrum charges as well as trade, will bring relief to the industry. For the last three years, telecom has been in the eye of a storm sweeping through India. What began as allegations of graft while allotting spectrum during the tenure of minister Andimuthu Raja, grew into a full fledged conflict between the executive and the judiciary. This culminated in a judgment, in February last year, through which the Supreme Court scrapped all 122 new licences issued by the UPA I regime and ordered that these should be auctioned. By then, the government was cowering under the scrutiny of the judiciary and anti-graft protests on the streets.
Taking no chances, it set reserve prices for spectrum auctions at levels so astronomically high that nobody could accuse it of doing any favours for industry. Indeed, as the TRAI’s Monday note makes clear, the astronomical reserve prices drove away bidders not once, but twice. In the second round of auctions, only one player bid for one circle, that too, after a 50 per cent cut in the price.
After slashing the reserve prices, in places by as much as 60 per cent, TRAI wants to bring bidders back to the table they had deserted. Allowing trade in spectrum, without restrictive conditions on the kind of sale that would be allowed, among operators will only add to the attractiveness of the new auctions.
Telecom could, once again, become the blue eyed sector for investors.
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