Indian mobile operators have been left reeling after telecom regulator TRAI recommended pricing spectrum at premium rates – including a thirteen fold hike in the base price for 2G airwaves.
The regulator had been tasked with providing its recommendations for the pricing and terms of a planned auction to re-allocate the 2G spectrum that will be left vacant following the cancellation of 122 licenses.
But its suggestions go beyond this auction, to the price for future spectrum allocations upon license renewals, and the refarming of spectrum on the 900-MHz band.
Trai claims that if all its suggestions are followed the government could ultimately raise up to 70 trillion rupees ($133.63 billion).
But the nation's operators, which would have to cough up this sum, have branded the recommendations as “arbitrary, regressive and inconsistent,” the Hindu reported.
Vodafone told the Economic Times it believes the recommendations could do “irreparable harm to the industry,” a sentiment echoed by Norway's Telenor.
TRAI has recommended that the 2G spectrum to be allocated in the auction be given a base price of 36.22 billion rupees ($691.5 million) per MHz – more than 13 times the base price the operators paid for the spectrum at license allocation, the Economic Times reported.
Only one 5 MHz block of spectrum will likely be made available for auction this year, and incumbent operators may also be eligible to bid. So any affected company looking to acquire enough spectrum to remain in operation could be facing a hefty cost.
TRAI also recommends the government consider refarming 900-MHz spectrum from incumbent operators and replacing it with 1,800-MHz.
But a source told the Economic Times that incumbents would legally challenge this recommendation, complaining that it could cost each incumbent an additional $3 billion to $5 billion in capex.
TRAI has also suggested a base price of 72.44 billion rupees for each unit of 900 MHz spectrum in an auction of the spectrum, among other recommendations.
The government is not bound to enforce TRAI's recommendations, and may send the matter back to review by the agency.