No unanimity yet on future auction of 2G spectrum

No unanimity yet on future auction of 2G spectrum

New Delhi: Differences are understood to have emerged within the Telecom Ministry on whether to go for auction of the 2G spectrum in future to arrive at appropriate price for the scarce resource or go by the mechanism suggested by TRAI which recommended over six-time hike in rates.

This will be a part of the New Telecom Policy 2011 and hectic discussions are under way to arrive at a final decision in this regard.

Telecom minister Kapil Sibal has already announced delinking spectrum from licence to enhance transparency in the system.

According to sources in the know, there is no unanimity as of now on whether to go by TRAI’s report or make auction compulsory as and when operators apply for the 2G spectrum.

When contacted Sachin Pilot, minister of state for Telecom and IT, declined to comment on this but said “there must be an appropriate market-driven price determined for spectrum going forward, and the government should realise reasonable resources for this scarce natural resource.

“And in pursuance to realise this, the government is talking to various stakeholders, including telecom service providers, TRAI and others, he said, adding “we shall assimilate all their views to realise this.

“How to achieve that way forward also would be clear," Pilot said.

The Telecom Regulatory Authority of India (TRAI) in its report in February 2011 had recommended over six-fold increase in the price for start-up 2G spectrum at 10,972.45 crore for pan-India licence compared to 1,658 crore till now.

And each Mhz of additional spectrum held by operators beyond the contracted 6.2 Mhz should cost one-time 4,571.87 crore (all India).

Terming the new recommendations of TRAI as “disastrous" for a majority of operators, the Cellular Operators Association of India, a lobby for GSM service providers, had said that it is like “changing the goal posts in the middle of the game".

When asked whether auction may lead prices artificially high with several contenders in fray and thus increase tariffs, sources said auction for 3G spectrum proved all these theories wrong.

The government raked in over 1.06 lakh crore for selling 3G spectrum and broadband wireless access spectrum in 2010 and still the service providers have been offering 3G services at affordable prices or even at lower than 2G services in some cases.

On the status of TRAI’s report on spectrum pricing, Pilot said DoT was analysing the report.

He, however, said that on pricing of spectrum and related issues, the DoT should be able to firm up its views in the next couple of months as part of the new Telecom Policy.