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| Govt to frame 2G view before TRAI chief's exit |
| Monday, 30 April 2012 | |
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The government is racing to finalize its views on the reserve price and quantity of 2G spectrum to be auctioned, in an effort to harmonize them with the recommendations of telecom regulator TRAI, before its chairman JS Sarma retires on May 14. The government, which is expected to have views different from the regulator, wants to send its inputs soon so a new chairman will not need to grapple with these issues. If the government differs with the regulator, under the TRAI Act, it must send its views to it and give 15 days to reconsider its views. After this, the government is free to proceed with its line of action on policy matters. The telecom commission meeting is expected to consider TRAI’s recommendations and take a final view on crucial issues like reserve price, quantum of spectrum and payment modalities. These will be sent to the empowered group of ministers headed by the finance minister Pranab Mukherjee, which will meet and finalize its views, which will be sent to TRAI. Once TRAI resubmits its views, the ministers’ panel will take the final call and fix the date of auctions. The Supreme Court has asked the government to complete auctions and grant fresh licenses and spectrum by August 31. On April 23, TRAI recommended a reserve price of Rs 3,326 crore for per MHz of spectrum to be auctioned. It has also suggested that in the current fiscal, only 5 Mhz spectrum per circle be put up for auctions. According to TRAI’s reserve price, operators must cough up Rs 18,110 crore for a pan-India license. Since this is seen as very high, the regulator has suggested a deferred payment option whereby operators would have to pay some 30 percent of the bid amount upfront, with the remaining to be paid over a 10-year period with a moratorium of first two years. It has also allowed the operators to mortgage spectrum to raise funds. The telecom industry has opposed the recommendations stating that it defies market realities and would kill the sector. Deferred payment and mortgage of spectrum are not being favored since it creates possibilities of later default, which may create problems for the government as happened in the initial years of 1995-96 when the sector was opened up. Since the total availability of spectrum in the 1,800 MHz band (GSM services) is 629 MHz, the government also feels putting up for auctions only 110 MHz (5 MHz per 22 circles) initially would only compound the scarcity value of radio waves and operators may not come forward to bid at all. –The Financial Express |
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