DoT Panel Said to Seek Higher 3G Base Price Than Recommended by Trai

An internal committee of the Department of Telecom is believed to have suggested fixing base price of 3G spectrum at Rs. 3,899 crores per megahertz, about 43 percent higher than the rate recommended by sectoral regulator Trai.

"The committee is of the view that market determined price of 2010 should be indexed using SBI PLR and 80 percent of that price can be fixed as reserve price for 2100MHz band (used for 3G services)," a source said.

The Trai, using SBI PLR, worked out the indexed price of Rs. 4,874.59 crores per megahertz. In 2010, the final 3G spectrum rate paid by telecom operators was Rs. 3,349.87 crores per megahertz.

Back of the envelope calculations show that 80 percent value of indexed price will come to about Rs. 3,899 crores per megahertz.

The Telecom Regulatory Authority of India on December 31 had recommended a base price at Rs. 2,720 crores per megahertz.

The regulator had said it recommended about 80 percent of mean value of different prices calculated using four methods to compute valuation of 3G spectrum.

These methods include index based price, 0.83 times valuation of 1800MHz (2G) spectrum band, producer surplus model (based on net saving of operator after expenditure for providing services) and an approach based on growth in mobile internet usage.

The report of the committee will be placed before inter-ministerial panel Telecom Commission which is scheduled to meet tomorrow to discuss 3G spectrum auction modalities.

Monday, Telecom Minister Ravi Shankar Prasad said the government intends to auction third generation or 3G spectrum in 2,100MHz simultaneously with 2G airwaves.