Indian telecom regulator Trai has admonished the telecom ministry for its plan to auction just 5MHz of 2.1-GHz spectrum during an auction scheduled for next month.
The decision to include only 5MHz of 2.1-GHz 3G spectrum in the first of the planned auctions could restrict competition, unfairly benefit incumbents and discourage future investments in the sector, Trai said in a response to the ministry.
While Trai had recommended that the 15 MHz block of 2.1-GHz spectrum due to be freed up under a spectrum swap deal with the military be included with the existing 5MHz block, the government has decided to auction the former in a separate auction during December.
But according to Trai's response to the telecom ministry, auctioning just 5MHz next month will lead to artificially inflated prices, unfairly benefiting only large companies with deep pockets willing to pay the premium. This will be detrimental to competition in the long term, the regulator has argued.
Trai also maintained its recommendation of setting a floor price for a 5MHz block of pan-India 3G spectrum at 27.2 billion rupees ($441.4 million), criticizing the government's decision to set the price at a far higher 38.99 billion rupees.