Regarding the licensing fees, GSM mobile operators on Monday said that the reserve price for 900 MHz in the forthcoming spectrum auction should be same as that for the 800 MHz band, used by CDMA players, because both bands had similar propagation characteristics.
"We propose that the reserve price of 800 MHz band as finally accepted by the government based on the Telecom Regulatory Authority of India's (TRAI) recommendations in February shall be used for the 900 MHz band also," Bharti Airtel said during an open house session on spectrum pricing for licences expiring 2015-16.
TRAI had recommended a pan-India reserve price of Rs. 2,685 crore per megahertz for 800 MHz band, used for offering CDMA services. The GSM players were of the view that 800 MHz and 900 MHz spectrum had similar propagation characteristics and were being used for the deployment of broadband technologies such as 3G and LTE.
"The coverage in 900 MHz is roughly double that in 1800 MHz. The reduction in capital and operational expenditure could be as much as 40 per cent. Operations in the 800 MHz band enjoy similar advantages," Vodafone said.
On the reserve price for 1800 MHz band, most telecom players unanimously said the base price recommended by the authority in September 2013 might be used for the next auctions as well.
"However, in the case of those services areas where auctions closed at reserve price, the reserve price may be reduced by 20 per cent," the telecom operators said.
As per TRAI, 184 Mhz of spectrum in 900 MHz band and 104 MHz in 1800 Mhz band can be put up for the auction. The government, in its Budget Estimates for 2014-15, has projected minimum revenue of Rs.9,355 crore from auction of 800 Mhz as well as the 900 Mhz and 1800 Mhz bands.
In December 2015, four licences of Bharti Airtel, seven each of Idea Cellular and Reliance Telecom and six of Vodafone will complete their 20-year term and would require renewal. The companies can renew their licences by paying a fixed fee but for continuing mobile and other wireless services they will need to buy spectrum afresh through auction at the market-determined rate. By April 2016, two more permits of Bharti and Idea will come up for renewal.
The 10-day long auction held in February this year gave the government over Rs.61,162 crore, far exceeding the target. Eight telecom firms had bid for 900 Mhz and 1800 Mhz bands. CDMA operator Sistema Shyam Teleservices (SSTL) said the reserve price for 900 MHz band should be 1.65 to 2 times the price in 1800 Mhz band and the reserve price for 800 MHz and 1800 Mhz spectrum should be the same.
On price of 1800 MHz, SSTL suggested the reserve price should be 80 per cent of the market value realised in the auctions held in February this year. The operators also sought more spectrum to be put up for auction.
TRAI Chairman Rahul Khullar also supported this demand, and asked the operators to mount pressure on the government on this aspect.
"The minimum spectrum in 900 MHz be such that it allows for the entry of new operators without affecting the continuity of services offered by extension licensees, and that the quantum procured be large enough to ensure the operation of standalone networks," Airtel said.
The quantum of spectrum made available for auction in 13 out of 18 service areas is far from sufficient to carry out a fair auction, it added.
Vodafone said the need of the hour was additional spectrum supply of 900/1800MHz spectrum and all efforts should be made to maximise the supply of spectrum in these bands, all available contiguous, non-contiguous and partial spectrum be put up for auction.Most operators also sought that for better utilisation, contiguous blocks of spectrum should be made available.
"As most of the technologies require contiguous spectrum of sufficient quantity for delivery of high data rates, it is most desirable to make available contiguous blocks for auction to the extent possible," Reliance Jio said. Regarding the minimum quantum of spectrum, Reliance Jio said it should be kept as that of this year February auction.
"A new entrant should be required to bid for a minimum of 5 blocks (5 MHZ) in 900 Mhz and 25 blocks (5 MHz) in 1800 MHz," Reliance Jio added.