Monday, 24 November 2014

Regulator Stands By Recommendation for Higher Spectrum Pricing

Sectoral regulator Trai today stood by its recommendations on pricing spectrum at 10 per cent higher rate than the previous auction, taking back certain airwaves from state-owned BSNL and defence giving up spectrum in 2,100 MHz band that can be used for 3G services.
The Department of Telecom (DoT) had sent back Trai's recommendations on spectrum valuation and pricing for a review, saying that some of them can't be implemented in the present form.
"After considering the comments given by DoT, the Authority has furnished its response to the government. The Authority has reiterated its earlier recommendations with detailed reasoning," Trai said in a statement.
The revised comments received from Trai are now likely to be placed before inter-ministerial panel Telecom Commission.
The Telecom Regulatory Authority of India (Trai) had last month given its recommendations on valuation and pricing of 1800 Mhz and 900 Mhz spectrum bands, being used for 2G services, for the next round of auction.
The regulator said there is no change in the reserve prices for spectrum in 900 Mhz and 1800 Mhz bands from what were recommended earlier.
The DoT had sought clarifications regarding the methodology for arriving at the reserve price and suggested applying the same method used in the February auction for determining the spectrum base price in the next round of sale of radiowaves as well.
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DoT had said that using the method suggested by Trai would lead to about further 3-20 per cent higher base price of spectrum across some circles compared to the rates suggested by the regulator.
The next round of spectrum auction is proposed to be held in February 2015 from which government is estimated to garner at least Rs 9,355 crore.
Most of the spectrum which is proposed to be put up for sale is being used by Airtel, Vodafone, Idea Cellular and Reliance Communications across various parts of the country.
These companies will need to buy back radiowaves to continue their operations in areas where their licences are expiring in 2015-16.
DoT had also sent back recommendations given for 800 Mhz (CDMA) spectrum band by Trai in February for reconsidering some points.
The regulator said it will reply separately to specific DoT queries on 800 Mhz band auction. It, however, reiterated its stand on first fully exploring the feasibility of the adoption of E-GSM for efficient utilisation of spectrum in the 800 MHz band.
DoT had said that E-GSM band requires vacation of spectrum by Defence to ensure availability which is likely to take time and keeping spectrum in the 800 MHz band unsold would result in foregone revenues for Government.
On 800 MHz, Trai said more than a year has passed since September 2013 when it had recommended that adoption of E-GSM should be explored in a time-bound manner and spectrum in 800 MHz band has not been auctioned till date.
"Are there no foregone revenues in this context?," Trai asked.
The regulator reiterated its recommendation to take back 1.2 Mhz of 900 Mhz spectrum from BSNL, utilising idle 1800 MHz spectrum in the defence band and vacating spectrum held in excess of 20 MHz by Defence in 1800 MHz band.
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"The Authority reiterated that dialogue needs to be held at the level of Finance Minister, Minister of Communications and IT and the Defence Minister to ensure the availability of additional spectrum for commercial use," Trai said.
DoT is of the view that it has no jurisdiction to take back the spectrum from BSNL under provisions of the license agreement.
However, Trai said BSNL was awarded spectrum in 900 MHz band administratively and free of charge and as it is a state-owned firm, government has every right to take the spectrum back.
"It is inexplicable to take the stand that the Government, being a sovereign and as owner of the PSU companies cannot resume spectrum given to the PSUs free of charge," Trai said.
The regulator also stood by its proposal wherein it had suggested that 60 Mhz of paired spectrum in 2100 Mhz band should be put up for sale in proposed auction. A part of this band is held by defence forces.
DoT, however, had said that "it does not appear feasible, to get the spectrum in 2100 Mhz band, in the time line proposed for auction of 800 Mhz (CDMA), 900 Mhz and 1800 Mhz band and vacation of spectrum by Defence may not be linked with the upcoming auction".
"In the 2100 MHz band, additional 3 blocks of 2X5 Mhz of spectrum can be made available by swapping spectrum in this band with Defence. Defence can be assigned spectrum in 1900 Mhz band," Trai said.
The regulator also said that spectrum in 800 MHz, 900 Mhz, 1800 Mhz and 2100 Mhz bands should be auctioned together.
"If auction of spectrum in 2100 Mhz were to be taken up later, there would continue to be uncertainty," Trai said.
The regulator also stressed its point that the supply of spectrum should be increased. "The constrained supply of spectrum poses a real threat to the continuity of services being provided to millions of subscribers by the expiry licensees," it added.
Trai also asked the government to announce the roadmap for auction of spectrum in 700 MHz band. "This should be done before the conduct of upcoming auctions in 900/1800 Mhz band," Trai said.