Telcos: Trai proposals may double tariff
"In May 2010, the regulator came out to set 2G prices in line with 3G prices as basic minimum bidding price. In May 2010, we heard that 900 (Mhz) band should be 1.5 times of 1800 Mhz … now in April 2012, it should be 2 times. We are confused … which methodology is right," COAI Chairman Sanjay Kapoor, who is also Bharti Airtel CEO, told reporters here.
"Based on the calculation and reality that me and my colleagues have, the figure and facts suggest that the implication of this change can be anywhere as high as 100 per cent of the existing rate … to be actually compensated by customer. This will vary from circle to circle," he said.
The members of industry body Cellular Operators Association of India include Bharti Airtel, Idea Cellular, Vodafone India, Uninor and Videocon Telecommunications.
Trai has suggested a base price of Rs 3,622 crore for one megahertz (MHz) for pan-India spectrum. This is around 10 times higher than the price at which 2G licences bundled with 4.4 MHz spectrum were allocated in 2008 under the then Telecom Minister A Raja.
According to Trai, a minimum of 5 Mhz spectrum should be allotted, which means that pan-India airwaves in 1800 MHz band will cost Rs 18,000 crore.
While Trai Chairman J S Sarma has said that recommended price will lead to an increase of 1.5 paisa cost on minute basis, Idea Cellular CEO Himanshu Kapania said the estimates can be challenged.
As part of spectrum auction recommendations, Trai has proposed roadmap for spectrum refarming under which existing player will be made to use high frequency of 1800 Mhz band compared to the low frequency band of 900 Mhz.
Telecom signals emitted using 900 Mhz frequency band cover large area compared to 1800 Mhz band. These proposals, if approved, will hit business of incumbent operators, including Bharti Airtel, Vodafone and Idea Cellular.