India’s telecom industry faces a potential crisis over spectrum. On Monday, telecom regulator Trai proposed new rules and prices for spectrum auctions. It recommended auctioning 5MHz in the 1,800 MHz band. Trai suggested a base price of Rs 3,622 crore for every MHz. That would mean a total reserve price of Rs 18,111 crore.
But that’s not all. Trai has also recommended prices for the other spectrum bands. For the 800/ 900 MHz band it has proposed a base price of Rs 7,244 crore per MHz. And for the 700 MHz space, the base price for every MHz is Rs 14,489 crore. The 700 MHz band is used for 4G services.
Telecom firms have already complained that the prices for spectrum have been set far too high. Trai’s new proposals come after the Supreme Court cancelled 122 telecom licenses and told authorities to auction the spectrum that would be freed up. But the new proposals could make it next to impossible for the affected operators to regain enough spectrum. Trai has called for each chunk of 5 MHz to be auctioned in blocks of 1.25 MHz. But telcos need at least 5 MHz if they want to start full telephony services.
Meanwhile, in a separate development, authorities may have to complete their auction for 2G spectrum much earlier than anticipated. On Tuesday, the Supreme Court gave the government another three months to auction the freed up spectrum. The court has rejected a plea from the department of telecommunications (DoT) asking for 400 days.
Moving to other news, India has got a downgrade during the week-- with a major ratings agency cutting its outlook for the country. On Wednesday, Standard and Poor’s slashed India’s outlook to “negative” from the earlier “stable”. On the bright side, it kept the country’s long-term sovereign rating of BBB-. But S&P also warned that a further downgrade was possible in the next three years. That move would bring India into the ‘junk’ category. S&P said its move was prompted by India’s fiscal challenges as well as slow growth abroad. The country’s fiscal deficit for 2011-12 is estimated to have been 5.9% of GDP. The target for this year is 5.1%. The cut in the outlook could also weaken the rupee and make overseas loans more expensive for Indian companies.
Delhi’s airport will soon be the most expensive in the world. The regulator Aera has approved an average 345% increase in charges at the airport. The hike is much lower than the 744% increase that airport operator DIAL was demanding. DIAL says it’s losing Rs 2 crore every day because of the current fee structure.
And finally, there’s one spot of good news for the economy. The India Meteorological Department believes we’re likely to see a normal monsoon this year. On Thursday, science minister Vilasrao Deshmukh said rainfall in the June to September period would be at 99% of the 50-year average. The annual monsoons account for about 80% of total rain in India every year.