The DoT (Department of Telecommunication) appears to be moving in a clear direction with respect to spectrum auctions. TRAI should respond to the DoT’s request for clarifications on its recommendations within the next couple of weeks after which the Telecom Commission and the eGoM will take a decision on the pricing of the Spectrum.
What are the Key Issues that DoT has raised in TRAI Recommendations on Spectrum ?
- Clarification on the basis for recommending auction of one slot of 5 MHz in the initial auction, even when additional slots are available after making provision for re-farming and when there is demand for such spectrum.
- Rationale behind recommending a reserve price of 2x the 1800MHz reserve price for 800/900MHz auctions – compared to 1.5x the 1800MHz reserve price as recommended earlier.
- Reasons for the reserve price for 1800MHz (US$710 per MHz for pan-India licence) being lower than the reserve price for 2100MHz (US$740 per MHz for pan-India licence).
- Clarification on the likely impact of increase in tariffs due to the new reserve prices which may adversely affect the economy and the companies.
- Appropriateness of recommending reserve price at this stage for auctions recommended to be held after 1-2 years and without awaiting outcomes of current auctions.
- Rationale for recommending 1% SUC whereas 3% was prescribed in case of 3G, which was also based on auction process. We think that if the SUC is raised to 3% from the recommended 1% charge, then in order to maintain overall parity with respect to the total payouts for the operators, the reserve price for spectrum auctions may need to be lowered.