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Thursday, 24 May 2012 00:00
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Telecom Comm needs to focus on a few key points

With the Department of Telecommunications (DoT) broadly agreeing with Trai’s suggestions on dramatically hiking the reserve price for spectrum (indeed, it has hiked it a bit more arguing Trai’s calculations didn’t take in the interest cost for a year!), the ball is now in the Telecom Commission’s court—apart from DoT officials, it comprises representatives of the finance and industry ministries and the Planning Commission. After the Telecom Commission takes a view on this later today, it will be passed on to an Empowered Group of Ministers for a final call. While the DoT panel has got into the minutiae of the Trai recommendations, both the Telecom Commission and the Group of Ministers need to stay focused on the broad picture. A few pointed questions need to be asked and various points of view, including of the industry, need to be taken on board.

 

First, is a 12-fold hike in the reserve price justified? Trai has done this by basing it on the 3G auction, but everyone knows that was a constrained auction in the sense that, with A Raja distributing all available spectrum to a few firms, telcos jumped at the first spectrum they saw in the 3G auctions. Two, given that, as per even the Trai, spectrum prices in India are 80-100 times those in OECD countries, is that a good idea? And three, given all of this, how can the resulting tariff hike be under 4 paise as the outgoing Trai chief keeps insisting? Much of this seems to be more maths than high policy and the cellular lobby has hired consultants PWC to put out a report on this which indicates a possible doubling of prices in metros, and 25-30% in other circles—it seems a simple matter to examine the rights and wrongs of such a contention. The other issue, of re-farming of spectrum, even though put off till the current licences expire—Trai wanted this to be advanced—is equally simple. Apart from whether, as the telcos claim, they have the legal rights to hang on to the more efficient 800/900 MHz spectrum—they are to get, in return, 1900/1800 MHz spectrum once their licences expire—the question is a simple one: will giving telcos 1900/1800 MHz spectrum in place of their 800/900 MHz spectrum mean that rural telephony will become unviable? Getting answers to these questions can’t be that difficult.

 

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