India calls for more spectrum; yet to rule on pricing

India’s Telecom Commission yesterday called for more airwaves to be made available in the country’s upcoming 2G spectrum auctions, but has yet to rule on whether to back the controversial high prices for licences suggested by the regulator.

The Commission said that at least 10MHz of spectrum should be made available in each service area, double the 5MHz recommended by the Telecom Regulatory Authority of India (TRAI).

The move is likely to be welcomed by local operators that have spoken out against the expected steep costs involved in acquiring the airwaves.

However, it is not clear if the additional spectrum will lead to lower reserve prices. TRAI has recommended a base price for a nationwide licence at INR36.22 billion (US$689.6 million) – over ten times higher than the prices set in a 2008 auction for the same airwaves. The Commission is to look at the pricing issue tomorrow (26 May), though ministers will have the final say on the auction rules.

The 10MHz of spectrum made available in each area will be made up of eight slots of 1.25MHz. Existing players will be able to buy two slots, while new players will be allowed to buy up to four slots. Additional spectrum could be made available if needed, the Commission said.

The licences awarded in the earlier 2008 auction were cancelled by India’s Supreme Court in February after the process was ruled “totally arbitrary and unconstitutional,” and deemed to have lost the Indian government as much as US$39 billion in potential income.

But the rules for the reallocation of the licences has been heavily criticised by the Indian operator community.

A report published earlier this week by PwC for the Cellular Operator Association of India (COAI) said that local operators could take on an extra US$50 billion in debt over the next five years if the auctions go ahead at the suggested prices.

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