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Trai proposal to deter growth, raise tariff: GSMA

New Delhi: Global telecom body GSMA has written to India`s Telecom Minister Kapil Sibal against Trai`s recommendations on spectrum auction, saying it can lead to increase in telecom tariffs and thus reduce economic growth.

"High upfront reserve prices can deter operators in taking part in an auction and … high prices flow through into high mobile prices which can retard growth in the number of subscribers and limit call volumes leading ultimately in reduced overall economic growth," GSMA Director General Anne Bouverot said in a letter to Sibal.

GSM Association (GSMA) globally represents GSM service providers and its member companies account for over 80 per cent mobile phone services market share worldwide. Its communique against spectrum auction proposals made by Telecom Regulatory Authority of India, follows a joint letter written by honchos of top five GSM operators in India.

The top executives belonging to Bharti Airtel, Vodafone, Idea Cellular, Uninor and Videocon Telecommunications in their letter had said the high base price of spectrum recommended by Trai can raise mobile tariffs by up to 30 per cent. They also demanded the recommended price be reduced by 80 per cent.

The Telecom Regulatory Authority of India (Trai) has recommended base price of Rs 3,622 crore for a megahertz of spectrum at pan-India level that is around 10 times higher than the price for 2G licences in 2008, when A Raja was the Telecom Minister.

According to Trai recommendations, a minimum of 5 Mhz should be allotted, which means that pan-India spectrum in 1800 MHz band will cost Rs 18,000 crore. The reserve price is five times the base price of Rs 3,500 crore for 3G auction.

Trai Chairman JS Sarma in an investor conference call had said that recommendations "will only raise the average spectrum cost per minute by 1.5 paise on an average."

Commenting on the high base price from spectrum, GSMA said "the short-term goals of maximising revenue for governments seeking to reduce budget deficits, are actually harmful to the development of the mobile sector and the socio-economic benefits it brings." GSMA in the letter said Trai`s "proposals disregard international best practice in spectrum policy and would jeopardise billions of US dollars of investment."

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