Telecom commission wants detailed study on airwaves auction price

Telecom Commission will ask the sector regulator to analyse the potential impact of a proposed airwaves auction base price that is seen as too high and has drawn protests from carriers.

The Commission however endorsed a separate regulatory proposal to auction by June next year airwaves in another band, Telecoms Secretary R.Chandrashekhar said on Saturday. That band currently used by older operators and will be taken back from them in the so-called airwave refarming.

The sector regulator had last month suggested an auction starting price that is nearly 10 times that paid by carriers in a 2008 state grant process for the basic 1800 mega hertz (MHz) band airwaves.

The auction, due by August, follows a Supreme Court order to revoke a total 122 zonal telecom permits awarded in a scandal-tainted state grant process in 2008.

The Telecom Commission, the highest decision-making body within the telecoms ministry, feels there is need of a detailed analysis of the impact of the proposed auction price on call tariffs and carriers’ investments before a decision is taken, Chandrashekhar, who chairs the Commission, said.

“For example, what is the impact of this spectrum price on the tariffs if this entire impact is passed on. And on the other side, if this entire impact is absorbed, what is the impact on the investments, viability and the return on the investments,” he told reporters after a meeting of the Commission.

The industry has criticised the high base price and limited number of slots proposed by the regulator and says the regulatory changes will cost them billions of dollars more, hurting profits, and will force them to increase tariffs for customers.

The Commission earlier this week said it wants a higher number of slots to be auctioned than what was suggested by the regulator.

The auction is the last chance for carriers including Norway’s Telenor and Russia’s Sistema to win back their permits that are set to be revoked after the court order.

Telenor and Sistema have threatened to pull out of India if the government goes ahead with the proposed rules. A panel of ministers has the final say on the auction rules including pricing.

SPECTRUM REFARMING

Older carriers such as Bharti and Vodafone are also fighting another regulatory proposal to refarm, or switch, their superior-quality airwaves in the 900 MHz band with relatively-inferior 1800 MHz at the time of renewal of their permits starting in 2014.

The carriers have the option to buy back in a separate auction the superior quality 900 MHz airwaves, although the proposed starting price for it is twice that of the lower-quality band. If they switch to the 1800 MHz band, network costs will increase significantly.