No decision on 2G pricing, EGoM favours refarming spectrum

June 5th, 2012 - 10:21 pm ICT by IANS  

Pranab Mukherjee New Delhi, June 5 (IANS) The Empowered Group of Ministers (EGoM) Tuesday failed to decide on a reserve price of the 2G spectrum but concluded that a minimum of 10 MHz spectrum would be auctioned.

“Some decisions have been taken, you will get to know by and by,” Communications Minister Kapil Sibal told reporters after the meeting without elaborating.

The Telecom Commission, which met last week, had left the question of spectrum pricing to the EGoM.

Sources said the EGoM could not decide on the base price because the Telecom Regulatory Authority of India (TRAI) failed to submit its full report on the price recommendation and its impact on customers and the industry.

At its meeting last month, the Telecom Commission had asked the new TRAI chairman, Rahul Khullar, to study and analyse the reserve prices proposed earlier and their impact.

TRAI had recommended a reserve price of Rs.3,622 crore for 1 Mhz pan-India spectrum, which is around 10 times higher than the price at which 2G licences were allocated in 2008 under then Telecom Minister A. Raja. Besides, it recommended to substitute the airwaves in the 900 MHz band with those in the 1,800 MHz.

The EGoM is said to have taken a decision on refarming (redistribution) of spectrum.

Reacting to this, Rajan Mathews, director general of Cellular Operators Association of India (COAI), an GSM operators’ lobby, told IANS that operators “will face a huge setback if refarming of spectrum is brought into place.”

He also said that failing to auction all available spectrum is nothing but creating an artificial scarcity that is “just not fair”.

Leading players like Bharti Airtel, Vodafone and Idea Cellular had written a letter to Finance Minister Pranab Mukherjee asking for his personal intervention on the issue of refarming of spectrum recommended by the sector regulator.

Overall, TRAI’s proposals have been highly criticised by the operators and independent analysts. Calling TRAI’s recommendations a “deathknell” for the industry, the operators have warned of a 100 percent hike in tariffs if the proposals are accepted.

“The EGoM would definitely meet the next time to a take a decision but unless the auction deadlines are extended, this kind of situation reduces time for the auction to be held,” Jaideep Ghosh, director of global consultancy firm KPMG, told IANS.

The Supreme Court mandated deadline for auction is August 31.

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