TRAI reiterates spectrum auction proposal to cut base price by 60 percent

Telecom regulator TRAI Wednesday reiterated its recommendations for a sharp 60 percent cut in the reserve or base price for sale of mobile phone spectrum in an upcoming auction.

Responding to clarifications sought by the Department of Telecommunications, the Telecom Regulatory Authority of India (TRAI) reiterated that the auction start price or the reserve price for spectrum in the 900 megahertz or MHz band in some key cities be cut by 60 percent.

It also suggested a 37 percent cut in the reserve price for spectrum in the 1800 MHz band.

TRAI stood by its stand of not auctioning 800 MHz band in the upcoming auction saying there is a large gap in the worth of spectrum in its present use as against its potential use and "no hasty decision" should be taken on the matter.

Questioning the sharp cut, a DoT panel had asked TRAI to reconsider its recommended reserve price.

DoT was of the view that the valuation did not appear to reflect the value of the liberalised spectrum, which has a much greater potential than 2G over the next 20 years.

However, in its response, TRAI reiterated its approach of calculating the reserve price.

"The methodologies used by the Authority are grounded in economic theory and have widespread international acceptance," it said.

For 2G spectrum in 1800 Mhz band, TRAI had recommended about 37 percent reduction in the base price and for 900 Mhz ? premium 2G band ? the regulator recommended a sharp reduction of about 62 percent compared to the last reserve price.

Seeking clarifications, the DoT panel has said, "Deviation of various constants, co-efficient and variables to arrive at the reserve price under different approach appears to be based on certain assumptions, on which no clarity could emerge from recommendation."

Terming DoT's observation puzzling, TRAI said assumptions, data sources and methodology adopted in calculating the value of spectrum under different approaches have been clearly explained.

On DoT's request to provide reserve price of 900 MHz spectrum in remaining 19 circles, TRAI said, "Once again, the observations are puzzling and erroneous. The assumptions and methodology adopted in estimating the value of 900 MHz spectrum based on value of 1800 MHz spectrum have been lucidly and elaborately spelt out perhaps a re-reading will provide the necessary clarity," it said.

The regulator said DoT had requested recommendations on reserve prices in the 900 MHz band for Delhi, Mumbai and Kolkata only.

On auction of 800 MHz band, TRAI had suggested no auction as there was no demand for these airwaves in the last auction and only one company had participated in March 2013 auction.

In the clarifications also, the Authority said directions of the Supreme Court have already been complied with, there is no compelling reason for the DoT to auction the spectrum in 800 MHz band along with 900/1800 MHz spectrum.