Reserve Prices for 900 MHz Spectrum too High: COAI

New Delhi, Jan 8 (IANS) The reserve prices proposed by the government for 900 MHz band in the upcoming telecom airwave auction are too high, the Cellular Operators' Association of India (COAI) said Thursday.

"The reserve prices for the proposed auction of spectrum in the 900 MHz band in 18 service areas have been increased by 32.5 percent over the reserve prices recommended by TRAI (Telecom Regulatory Authority of India)," Indian GSM body COAI told Communication and IT Minister Ravi Shankar Prasad in a letter Thursday, a copy of which is available with IANS.

"We would like to submit that the reserve prices for 900 MHz band recommended by TRAI were already too high, and a further escalation by 32.5 percent is completely unreasonable. Across all 18 circles where 900 MHz auction is proposed, this translates into a steep increase of Rs.4,880 crore for 5 MHz of spectrum," said the letter written by COAI director general Rajan S. Mathews.

"We reiterate such steep increases would lead to major impact on growth and expansion of quality networks in coming years and adversely impact the consumer as well national vision of faster broadband for all and Digital India initiatives," said Mathews in the letter.

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In December 2015, seven licences each of Idea Cellular and Reliance Communications, four licences of Bharti Airtel and six licences of Vodafone will complete their 20-year term after which they should be renewed.

The cabinet Monday approved the proposal of the Department of Telecom (DoT) to proceed with auction in 800, 900 and 1800 (mega hertz) MHz bands and finalised its reserve prices.

"The reserve price approved is Rs.3,646 crore pan-India per MHZ in 800 MHz, Rs.3,980 crore for 900 MHz band pan India excluding Delhi, Mumbai, Kolkata, and Jammu and Kashmir; Rs.2,191 crore pan India (excluding Maharashtra and West Bengal) in 1800 MHz band," an official statement said.

The quantum of spectrum to be put to auction is 103.75 MHz in 800 MHz band in all service areas, 177.8 MHz in 17 licence service area (LSA) in 900 MHz band and 99.2 MHz in 15 LSAs in 1800 MHz band.

Thus a total of 380.75 MHz in 800, 900 and 1800 MHz is being put to auction, it added.

The estimated revenues from this auction are Rs.64,840 crore (excluding 2100 MHz spectrum) of which Rs.16,000 crore is expected to be realized in the current financial year (2014-15).

The auction is due in February. The revenue target from spectrum auction set by the government in the 2014-15 budget is Rs.45,471 crore.

"We are, therefore, surprised and unable to comprehend the reason for such steep increase in reserve prices, particularly considering that this would have a major negative impact on the health of the already debt burdened industry besides impacting consumer tariffs, expansion of networks and quality of service of networks and thus, jettisoning the goal of Digital India," the letter added.

The COAI requested DoT review the pricing of 900 MHz spectrum and make available 15-20 MHz in 2100 MHz band (or 3G band) for simultaneous auction with the other bands so as to ensure fair and reasonable auction.

The cabinet decision also indicated the intent to put 2100 MHz or 3G spectrum to simultaneous auction along with auction of other bands.

"In this regard, there is an urgent need for an early decision on the quantum of the 2100 MHz band available to enable the spectrum in this band to also be auctioned simultaneously in the auction planned in February 2015," the letter added.

Source: IANS