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The Telecom Regulatory Authority of India (Trai), on Wednesday, recommended a 10% increase in base price for 1800MHz spectrum at Rs 2,138 crore per megahertz (MHz) in 20 circles compared with the winning bidding price of the same spectrum band in the February auction.
For 900MHz spectrum band, the regulator has suggested the reserve price at Rs 3,004 crore in 18 telecom circles where existing licences will be due for renewal.
The Telecom Commission, which is the highest decision making authority within the DoT, will now review the regulator's suggestions before finalising the reserve price for the auction.
Trai has suggested a higher reserve price for the 1800MHz spectrum band considering the rapid growth in data revenue, which has increased by about 100% since Trai had recommended reserve price for the spectrum band, Trai chairman Rahul Khullar said.
In the February auction, the Government had received bids worth Rs 2,270.4 crore per megahertz in all the 22 circles in 1800MHz band. But, in the next round, scheduled in February next year, no spectrum is available for auction in Maharashtra and West Bengal circles.
Cellular operators, who will have to renew their licences, together hold about 172 MHz in the 900 MHz band and about 26 MHz in the 1800 MHz band. "The focus is on making spectrum available and the recommended action plan is to ensure contiguity of spectrum," Khullar said.
In its recommendation, the regulator has noted the need for additional spectrum that should be vacated for commercial use before the next round of spectrum auction, and has urged the finance, defence and the communications ministers to discuss and ensure availability.
"In the 900MHz band, only the spectrum held by them (operators) is available for the auction. These licensees will have to win back this spectrum to ensure business continuity in the Licensed Service Area; if they don't win, it places the large investment made in the LSAs in jeopardy," Trai said in a statement. "The continuity of services to millions of customers is also at stake".
Auction of 2100MHz band, which is currently used for 3G services, should be conducted once there is clarity on availability, it said, adding that the entire 120MHz (2x60MHz) spectrum in the 2100MHz band should be made available for commercial use.
The regulator also noted that 1.2MHz of spectrum in the 900MHz band should be taken back from Bharat Sanchar Nigam Ltd (BSNL) in all circles where licenses expire in 2015-16, except in Punjab. In return, BSNL should be allotted 1.2MHz in the 1800MHz band in each circle, subject to some conditions.
Besides, Trai has also noted that the Government should take a fresh look at the implementation of the extended GSM band that the regulator has proposed last year.
Operators, however, are happy with the Trai recommendations on reserve price. Rajan Mathew, director general, Cellular Operators Association of India (COAI) said, "The regulator has recognised the need for more spectrum for commercial use, including the 2100Mhz band and the EGSM band. The proposal to free-up additional spectrum across bands for commercial use would be helpful for the industry. On the pricing front, we'll have to take a closer look. Now, the Government needs take these to the implementation stage," he added.
In the Budget estimate for 2014-15, the DoT has projected revenue receipts from the upcoming auction, which will include the sale of airwaves in the 800-MHz, 900-MHz and 1800-MHz bands, at Rs 9,355 crore.
The projected figure is far too conservative, considering the successful auction that generated a total bid value of Rs 61,162.22 crore in February by selling 46MHz of airwave in the 900MHz band and about 307MHz spectrum in the 1,800MHz band.
