Trai stand may push mobile tariffs up

New Delhi: Mobile tariffs could go up in the near future as the telecom regulator Trai on Thursday stood by its recommendation of over six-fold jump in 2G spectrum price.

Since most of the incumbent operators will have to renew their licences in the next 3-5 years, they might have to shell out Rs Rs 10,972.45 crore for acquiring start-up 2G spectrum as against to Rs 1,658 crore paid earlier. Trai has sent back its recommendations to the Department of Telecom (DoT) which had sought clarifications from the regulator before finalising the National Telecom Policy 2011.

With regard to one-time charge for additional spectrum beyond the contracted limit of 6.2 MhZ, Trai has left it to the government to take an appropriate decision. In its response to DoT, Trai said "…should the government decide to charge the spectrum beyond the initial spectrum (6.2 MHz) by way of amending the licence conditions, the current price would be what has been estimated by the experts" which is Rs 10,972.45 crore for pan-India licence.

In its recommendations earlier this year, Trai had said that each MhZ of additional spectrum, after the 6.2 MHz limit, held by operators should cost one-time Rs 4,571.87 crore (all-India). However, it would vary from circle to circle and the operators would have to pay only for those where they hold extra spectrum.

According to Trai recommendations, all licencees would have to pay for spectrum at the current price at the time of renewal of licences, or else at price to be discovered through auction or any other market-driven mechanism. Trai said the price of spectrum in the 800 MhZ band and 900 MhZ band (both are considered to be of superior quality) would be 1.5 times of the price of 1800 MhZ band spectrum.

The regulator, however, recommended some relief by way of suggesting a uniform licence fee of 6 per cent– to be achieved over the next four years– of the adjusted gross revenue (AGR.)

To ensure a level-playing field among operators, Trai has recommended that if a resultant entity after merger or acquisition commands up to 35 per cent market share, the merged or acquired company would be considered in `green line` or safe harbour.

Those with above 35 per cent but less than 60 per cent would be referred to Trai for its recommendation. The regulator would carry out a detailed examination to ensure that there is no abuse of market dominance. If an entity ends up having over 60 per cent market share, Trai will not consider the particular merger or acquisition.

"The limit for spectrum holding would be 25 per cent of the spectrum assigned in a service area," Trai added. On spectrum sharing, Trai said, "Spectrum sharing would be permitted between any two licensees holding spectrum subject to the condition that the total spectrum would not cross the permissible limit under mergers."

The permission would be for a period of five years, subject to renewal for one more term of five years, it added. On the issue of identifying additional spectrum, Trai said it is separately initiating an exercise to review the usage of spectrum available with the government agencies.

The regulator would also separately initiate a consultation process to explore the feasibility of liberalisation of spectrum. It is also looking at limiting the auction of 700 MHz band auction initially to those not having spectrum in the 800/900 MHz band, subject to the condition that holders of the 800 and 900 MHz band would pay the market price.

On exit policy, Trai said it would initiate a consultation process and forward its recommendations to the government in due course.