The Cabinet fixed the base price of 2G spectrum at
Rs 14,000 crore for 5 MHz of all-India airwaves on Friday - against the Telecom Regulatory Authority of India (Trai) proposed price of Rs 18,200 crore - setting the ground for auction of spectrum vacated after the cancellation of 122 telecom licences by the Supreme Court (SC) on February 2.
The industry criticised the decision
terming the price too high. The price is seven times higher than the one new companies had paid in 2008 to get spectrum from the-then telecom minister A. Raja.
The fixed price is for airwaves in the 1,800 MHz band, in which GSM-based mobile carriers operate.
For airwaves in the 800 MHz band, which is currently used by CDMA-technologybased carriers like Russia's Sistema, the Cabinet set the starting price at 1.3 times the 1,800 MHz band at Rs 18,200 crore.
A Cabinet meeting headed by Prime Minister Manmohan Singh decided to fix the reserve price at the lower end of the Rs 14,000-Rs 15,000 crore band recommended by an Empowered Group of Ministers (EGoM) recently.
For the first time, the
government is auctioning telecom spectrum openly after SC in the same judgment had asked the government to conduct fresh auctions by August 31.
The auction is crucial for companies such as Uninor and Sistema Shyam Teleservices
who will have to shut down operations after September 7 if they fail to get licence.
Norwegian operator Telenor is still indecisive.
"We need to look very carefully at the details of this new recommendation and take a proper decision based on facts," Telenor spokesman Glenn Mandelid said.
The reserve price has disappointed the industry, which had been demanding a 80-per cent cut in the reserve price suggested by Trai.
Industry body
Cellular Operators Association of India (COAI) said that though the base price has been cut by 22.5 per cent, it will not help in lowering tariffs. It said that this would lead to up to 100-per cent increase in mobile tariffs.
The Cabinet also approved levy of annual spectrum usage charge of three to eight per cent on different slabs of revenue as recommended by the EGoM.
Telecom minister Kapil Sibal said that the government chose the lower figure of Rs 14,000 crore as it will help bring in more foreign investment and aggressive bidding for the auction.
"We could have put the base price at Rs 22,000 crore or Rs 25,000 crore and further lowered the spectrum usage charge. Our decision is based on India's economic interests. This will help us to bring in more foreign investors. I am sure many others would also like to take part in India's telecom sector," said Sibal.
He also said: "We have liberalised the use of spectrum. It is technologically neutral. Telcos can use spectrum using any kind of technology. The banks have been permitted to mortgage spectrum. This will help telcos in generating funds."
The August 31 deadline may not be met. The government will approach the SC for further extension of the deadline.
"We will move the Supreme Court to seek
extension of the August 31 deadline. We will be appointing auctioneers soon. They will decide on the timeline for auction," said Sibal.
Courtesy: Mail Today 
Special 
