The GSMA has warned that India's plan to set a high reserve price for the upcoming 2100-MHz spectrum auction could have significant negative consequences on the telecom sector.
In a statement, GSMA chief regulatory officer Tom Phillips criticized the government's decision to set the reserve price at almost 36% higher than that recommended by regulator Trai.
“While high auction prices may generate short-term revenues for the government, in the longer term they will negatively impact the development of India’s mobile networks and delay investment in infrastructure, resulting in higher retail prices and an inferior mobile experience for consumers,” he said.
The decision to put only 2x5MHz of 2.1-GHz spectrum on the block – against Trai's recommendation to auction at eleast 2x20MHz – also risks further distorting the outcome of the auction, the GSMA said.
The Indian government is planning an auction in February for spectrum in four frequency bands. But the government is basing the reserve price on the outcome of the most recent 3G auctions, over the objections of Trai.
Accordingly the reserve price for the 5MHz block of 2.1-GHz spectrum has been set 38.99 billion rupees ($635.8 million), far higher than Trai's recommendation of 27.2 billion rupees.
“Mobile broadband is set to grow exponentially throughout India, driving digital inclusion and economic growth for India’s consumers and businesses,” Phillips said.
“However, the GSMA cautions that these forecasts will only become reality if mobile operators have the capacity to make the necessary network investment in India.”