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| DoT to Bargain with Telcos for Lowering Reserve Price |
| Friday, 15 June 2012 | |
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The telecom department (DoT) has offered to reduce the reserve price for airwaves in the upcoming sale if existing mobile phone companies agree to match the auction-determined price for their frequencies over the remaining life of their licences. This proposal forms a key part of a package the DoT is attempting to cobble together to reach a settlement with companies that have vigorously opposed sector regulator TRAI’s controversial recommendations on pricing and refarming of spectrum. But the compromise attempt may not succeed as dual-technology companies such as Reliance Communications and Tata Teleservices are unhappy with the proposals. Reduction of the reserve price is a major demand of all telcos, but both Reliance Communications and Tata Teleservices have sharply criticised the DoT’s plan to make incumbents pay the auction-determined price for their existing 2G airwaves over the remaining licence period. All telecom licences in the country are valid for 20 years, and unlike pure-play GSM operators like Bharti Airtel and Vodafone, the dual technology companies have more than 10 years to go before their permits expire. The proposal to make telcos pay for existing spectrum will enable the government garner more than Rs 1,00,000 crore from existing operators and strengthen its case that it is not discriminating against new operators that bid for airwaves in the upcoming auctions. At the same time, it will give the government the flexibility to lower the reserve price for the auctions as the loss of revenues will be compensated by the money it will collect from the existing operators. The proposed settlement may also involve both the government and operators agreeing to drop all past court cases related to policy issues and implementation. For instance, the telecom department will withdraw its case against the 3G roaming pacts signed by Bharti Airtel, Vodafone Essar and Idea Cellular that allow these companies to provide high-speed data facilities on a pan-India basis. Telecom Minister Kapil Sibal and DoT Secretary R Chandrasekhar have outlined parts of the proposed deal in their recent meetings with senior executives of mobile phone companies. Several Permutations & Combinations DoT had also offered to dilute the contentious proposals relating to refarming of spectrum, which would have forced operators like Bharti, Idea and Vodafone to relinquish their more-efficient 900 MHz airwaves and bid for the less-efficient 1800 MHz frequencies. Sibal had indicated that the government would allow existing operators to retain 50 percent of their 900 MHz spectrum as it would provide an additional 10 MHz of airwaves in this band. The DoT said several permutations and combinations had been discussed and one must not assume that all these will eventually be offered to telcos. “We are presenting our case and hearing the views presented by companies. We are collecting their suggestions on this issue and attempting to jointly outline a strategy to move forward,” a DoT official said. But the chief executive of a leading telco cautioned against excessive optimism about a grand compromise. “We have attended meetings, but so far the telecom department has not given any offer in writing. Moreover, it is making different verbal offers to different companies. It has also not discussed the trade-offs,” he said. An official from AUSPI, said the proposed package favoured only GSM players, and said both RCom and Tatas would reject the deal. During discussions with the industry, the telecom department had also said it may not pursue plans to impose a retrospective one-time charge on incumbent GSM operators for all excess 2G spectrum they hold beyond the 6.2 MHz limit. This will offer relief to the tune of Rs 10,000 crore to BSNL while Bharti Airtel will save around Rs 8,000 crore, Vodafone about Rs 5,000 crore and Idea Cellular close to Rs 2,000 crore. But, the final decision would depend on the outcome of the Presidential Reference in the Supreme Court, said the DoT official. The AUSPI official quoted earlier claimed the government would be hit with a Rs 40,000-crore scam if GSM operators were not charged for excess airwaves beyond 6.2 MHz retrospectively. The telecom department has also offered to renew the licences of existing operators by another 20 years, and not 10 years as announced by Sibal earlier this year, provided operators pay the auction-determined price for their entire spectrum. This will allow them to use their airwaves for deploying any technology of their choice, enabling them to offer high-speed 3G or 4G services on 2G frequencies for the next two decades. But AUSPI is opposed to this as well. –The Economic Times |
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