900MHz Base Price Should Be the Same as 800MHz: GSM Operators

"We propose that reserve price of 800MHz band as finally accepted by the government based on the Trai's recommendations dated February, 2014 shall be used for 900MHz band also," Bharti Airtel said during an open house session on spectrum pricing for licences expiring 2015-16.

The Telecom Regulatory Authority of India had recommended a pan-India reserve price of Rs. 2,685 crore per megahertz for 800MHz band, used for offering CDMA services.

The GSM players were of the view that 800MHz and 900MHz spectrum have similar propagation characteristics and are being used for the deployment of broadband technologies such as 3G and LTE.

"The coverage in 900MHz is roughly double that in 1800MHz. The reduction in capital and operational expenditure could be as much as 40 percent. Operations in the 800MHz band enjoy similar advantages," Vodafone said.

On the reserve price for 1800MHz band, most of the telecom players unanimously said base price recommended by the Authority in September 2013 may be used for the next auctions as well.

"However in the case of those services areas where auctions closed at reserve price, the reserve price may be reduced by 20 percent," the telecom operators said.

As per Trai, 184MHz of spectrum in 900MHz band and 104MHz in 1800MHz band can be put up for the auction.

The government, in its Budget Estimates for the current financial year, 2014-15, has projected minimum revenue of Rs. 9,355 crore from auction of 800MHz as well as the 900MHz and 1800MHz bands.

In December 2015, 4 licences of Bharti Airtel, 7 each of Idea Cellular and Reliance Telecom and 6 of Vodafone will complete their 20-year term and would require renewal.

The companies can renew their licences by paying a fixed fee but for continuing mobile and other wireless services they will need to buy spectrum afresh through auction at market determined rate. By April 2016, two more permits of Bharti and Idea will come up for renewal.

The 10-day long auction held in February this year gave the government over Rs. 61,162 crore, far exceeding the target. Eight telecom firms had bid for 900MHz and 1800MHz bands.

CDMA operator Sistema Shyam Teleservices (SSTL) said the reserve price for 900MHz band should be 1.65 to 2 times the price in 1800MHz band and reserve price for 800MHz and 1800MHz spectrum should be same.

On price of 1800MHz, SSTL suggested the reserve price should be 80 percent of the market value realised in the auctions held in February this year.

The operators also sought more spectrum to be put up for auction. Trai Chairman Rahul Khullar also supported this demand and asked the operators to mount pressure on the government on this aspect.

"The minimum spectrum in 900MHz be set such that it allows for the entry of new operators without affecting the continuity of services offered by extension licensees, and that the quantum procured be large enough to ensure the operation of standalone networks," Airtel said.

The quantum of spectrum made available for auction in 13 out of 18 service areas is far from sufficient to carry out a fair auction, it added.

Vodafone said the need of the hour is additional spectrum supply of 900/1800MHz spectrum and all efforts should be made to maximise the supply of spectrum in these bands, all available contiguous, non-contiguous and partial spectrum be put up for auction.

Most of the operators also sought that for better utilisation, contiguous blocks of spectrum should be made available.

"As most of the technologies require contiguous spectrum of sufficient quantity for delivery of high data rates, it is most desirable to make available contiguous blocks for auction to the extent possible," Reliance Jio said.

Regarding the minimum quantum of spectrum, Reliance Jio said it should be kept as that of February 2014 auction.

"A new entrant should be required to bid for a minimum of 5 blocks (5MHz) in 900MHz and 25 blocks (5MHz) in 1800MHz," Reliance Jio added.