3G floor price: Telecom Commission rejects Telecom Regulatory Authority of India’s proposal

NEW DELHI: The Telecom Commission on Wednesday rejected the reserve price for 3G airwaves proposed by the Telecom Regulatory Authority of India (Trai) for next month’s spectrum auctions and sent it back to the latter for reconsideration, signalling yet another skirmish between the ministry and the watchdog.

This follows an internal telecom department panel report that was of the view that the base price of the 3G airwaves should be much higher than the Rs 2,720 crore per unit proposed by the regulator. Trai will have to revert to the telecom department in 15 days. The final decision on the price will then be taken by the Telecom Commission, the top decision-making body of the department, and it will subsequently have to be ratified by the Cabinet.

Over the last year, the telecom department has rejected all key pricing recommendations sent by the regulator. Only last month, it fixed the reserve price for 2G airwaves to be sold in the upcoming auction at much higher levels than those proposed by the regulator. In the 800 Mhz band, the telecom department fixed the reserve price at 17% above that recommended, for 900 Mhz at 23% higher and for 1800 Mhz at 2.5% higher.

The telecom department has also recently rejected the regulator’s recommendation to auction more third-generation spectrum and ignored other proposals by it.

These include exploring an extended GSM band, taking back bandwidth from state-run telcos BSNL and MTNL and putting them up for sale, and bringing in trading and sharing rules before next month’s auctions.

While former top Trai officials told ET that there was nothing new about the government returning the regulator’s proposals for reconsideration, experts said differences have become more pronounced. “The gulf between the two sides is clearly widening and more visible than ever before,” said Mahesh Uppal, of Com First (India), a telecom consultancy. The telecom ministry under an assertive Ravi Shankar Prasad is clearly keen to demonstrate that it calls the shots. “Will the industry come to an end if we don’t auction 15 MHz of 3G airwaves this fiscal?” said a senior telecom official. This official said the regulator must make its recommendations on issues and then leave it to the government to decide what is in the best interests of the sector. “They (Trai) can keep on whining and writing, but we have shown who the boss is,” he said.

Trai, led by Rahul Khullar, its feisty chairman, has not pulled any punches. It has publicly and privately criticised the telecom department on several issues ranging from the specifics of the Digital India programme to pricing of airwaves to policy matters regarding trading and sharing of frequencies to its decision on spectrum user charges. Khullar’s impatience with the slow functioning of the telecom department has not been a secret either.

“The trading guidelines and the sharing guidelines have been developed in this office and for a very simple reason, because if we had merely sent a recommendation to DoT (Department of Telecommunications), God alone knows when the guidelines would have seen the light of the day,” the Trai chairman had said in a TV interview in September. “Since these guidelines have been formulated in consultation with the industry, it should be possible for the department to notify them, invite any final comments and then finalise it.”

Such views have not gone down well with the telecom department, which has so far not acted on the spectrum trading and sharing guidelines. The acrimony between the two has only slowed down decision-making process even further. Telecom department officials said the sharing and trading norms have not been put in place before next month’s airwaves sale because the ‘back and forth’ between the government and the regulator that would have been required to finalise guidelines would have pushed back the auctions.

Source: ETTelecom

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