TRAI for pricing 2G spectrum based on 3G auction

This would mean existing operators would have to pay 3G rates for additional spectrum

The Telecom Regulatory Authority of India (TRAI), in its recommendation on spectrum allocation and pricing, today suggested that additional 2G spectrum could be sold to existing operators at a price that is based on the auction of 3G spectrum that is currently under way, reports PTI.

The telecom regulator has also mooted delinking the sale of spectrum from issue of license, as is the current practice.

Raising the quantum of minimum amount of spectrum (contracted amount of 6.2 MHz to the operators), the regulator said: "All the spectrum beyond 6.2 MHz will have to be paid for at the current market price (linked to 3G price) by GSM operators and for the CDMA operators the spectrum assigned beyond the contracted amount of 5 MHz will have to be paid for."

Dealing a big blow to several existing operators like Bharti Airtel, BSNL and Vodafone Essar, the regulator said these service providers will have to pay an additional one-time charge for the spectrum they hold beyond 6.2 MHz, which will be paid at the current price of spectrum up to 8 MHz and after that it will be charged at 1.3 times the current price.

This would mean existing operators would have to pay 3G rates for spectrum they hold above 6.2 MHz. The big three players—Bharti Airtel, Vodafone and BSNL—hold around 10 MHz spectrum in many key circles.

Endorsing the telecom ministry's decision not to auction 2G spectrum two years ago, TRAI chairman JS Sarma said, "It is not feasible to subject the spectrum in 800-900 -1800 MHz band to auction process, considering that the amount of spectrum after meeting the obligation of contracted spectrum is very limited and the number of claimants for additional spectrum would be extremely few,"

The telecom ministry's decision to sell 2G spectrum in 2008 at 2001 prices had become the subject of a major controversy, with the opposition parties alleging a scam that cost the government Rs60,000 crore.

Telecom minister A Raja's decision to allocate mobile licenses with 4.4 MHz of 2G spectrum at a price of Rs1,651 crore to a host of companies that included realty player Unitech Wireless, Videocon, Swan, prompted the allegations of corruption.

Consequently, the CBI was roped into to look into the allocation of giving away spectrum at rates much below the market price.

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