Telecom tariffs won't rise on costlier spectrum: Regulator
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Telecom regulator TRAI is unfazed by the criticism that its newly recommended policies on spectrum auction has generated in the Industry. In April, Telecom Regulatory Authority of India or TRAI had proposed a steep hike in base price for auctioning of spectrum. The recommendation came following the Supreme Court order cancelling 122 licences in February.
In an interview with NDTV, TRAI chairman JS Sarma said he isn't surprised with the industry reaction. Sarma rejected the charge of telecom firms that tariffs will rise by 25-30 per cent if these proposals are accepted, saying the increase if any will be very marginal.
"I am not really surprised because this is not the first time this has happened…earlier also, even in 2010, the reaction was similar but over a period of time the government has accepted all the recommendations," Sarma told NDTV.
Five telecom operators, including Vodafone and Bharti Airtel, had written to Telecom Minister Kapil Sibal earlier, saying the high cost of airwaves, as recommended by TRAI, can raise mobile tariffs by up to 30 per cent.
In its recommendations, TRAI proposed a base price of Rs 3,622 crore for every mega Hertz (MHz) of spectrum in the 1800 MHz band, which means the minimum price for the full 5MHz that’s needed to start mobile services comes to Rs 18,110 crore. In 2008, the government had allotted 4.4 MHz spectrum free with telecom licences for a fee of Rs 1,651 crore.
Rankled by the telecom regulator's recommendations for 2G spectrum auctions, telecom companies made a joint pitch to top government functionaries, including Home Minister P Chidambaram and Finance Minister Pranab Mukherjee, for not accepting the recipe of the industry watchdog.
"This has been the most destructive period of regulatory environment I have seen in 16 years," Sunil Mittal, chairman of Bharti Airtel said saying TRAI recommendations will be "catastrophic" for the entire telecom sector.
However, Sarma defended the high prices saying the spectrum up for auction could be used for any kind of services.
"The whole problem arises because you are comparing 2001 price or what was given in 2008 with the price, but the two products are entirely different and this is spectrum in its pure form and people can use it for any purpose," he said.