DoT panel suggests higher 3G spectrum 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 crore per megahertz, about 43 per cent higher than the rate recommended by the Telecom Regulatory Authority of India (Trai).

The committee is of the view that market determined price of 2010 should be indexed using SBI PLR and 80 per cent of that price can be fixed as reserve price for 2100 Mhz band (used for 3G services), a source said. Sector regulator Trai, using SBI PLR, worked out the indexed price of Rs 4,874.59 crore per megahertz.

In 2010, the final 3G spectrum rate paid by telecom operators was Rs 3,349.87 crore per megahertz. Back of the envelope calculations show that 80 per cent value of indexed price will come to about Rs 3,899 crore/MHz.

Trai on December 31 had recommended a base price at Rs 2,720 crore per megahertz. The regulatory body had said it recommended about 80 per cent 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 1800 Mhz (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 the Telecom Commission, an inter-ministerial panel, which is scheduled to meet on Wednesday to discuss 3G spectrum auction modalities.

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