New Delhi: Telecom regulator TRAI on Wednesday recommended a base price or auction starting price of Rs 2,720 crore per megahertz for sale of pan-India 3G mobile spectrum in February, about 19 percent lower than what operators paid in 2010.
The 3G spectrum in 2010 had attracted bids worth Rs 16,750.58 crore for a block of 5 Mhz frequencies on pan-India basis which amounts to about Rs 3,350 crore per Mhz.
The recommended base price is about four times higher on per megahertz basis when compared to reserve price of Rs 3,500 crore for 5 Mhz fixed by the government for last 3G auction.
Besides, the Telecom Regulatory Authority of India has recommended that DoT should put additional 15 Mhz for auction, which has to be obtained in exchange of spectrum that is with the Defence services.
The Department of Telecom, however, is optimistic of getting 5 Mhz of 3G spectrum (2100 Mhz band) from the Defence Ministry.
"The Authority recommends that the reserve price for 2100 MHz spectrum in each LSA (licence service area) should be...Rs 2,720 crore," TRAI said.
"Furthermore, the 15 MHz of spectrum in the 2100 MHz spectrum being vacated by Ministry of Defence, in lieu of spectrum in the 1900 MHz spectrum, should be auctioned in view of the in-principle agreement reached with MoD, even if it is not available immediately," it added.
This can be done as "actual assignments do not have to be made immediately", it said.
The regulator has recommended that the DoT should take all measures to ensure that the 2100 MHz spectrum which was earlier assigned to S-TEL in three service areas -- Bihar, Orissa and Himachal Pradesh -- is also put to auction.
STel closed its business in India after the Supreme Court cancelled 122 licences in February 2012 in the 2G spectrum allocation case.
The auction for 800, 900 and 1800 megahertz bands is expected to be held in February and DoT is also mulling auctioning 3G radiowaves (2100 Mhz) along with these three bands.
The recommended base price of Telecom Regulatory Authority of India is about 80 percent of mean value of different prices calculated using four methods to compute valuation of 3G spectrum.
These methods include index based price, 0.83 times valuation of 1800 Mhz (2G) spectrum band, producer surplus model (based on net saving of operator after expenditure for providing services) and approach based on growth in mobile internet usage.
TRAI has recommended that in upcoming auction of 2100 MHz band spectrum, an auction-specific cap should be placed that no bidder would be permitted to bid for more than 2 blocks in an LSA if 3-4 blocks are available in that licence service area.
TSTP (Test Schedule Test Procedure) which prescribes the process and method for measurements and tests to be carried out to ensure the required roll-out of the 3G network should be finalised at the earliest but, in any case, no later than the conduct of the February 2015 auction, TRAI said.
The regulator has said that list of areas under rural exchange along with the names of the towns under them should be made part of the auction document.
Besides, it said, telecom operators winning 3G spectrum in the upcoming auction should be mandated to roll out network on this spectrum with 3 years from the time of getting the radiowaves.
In 2010, there was obligation to roll out network within 5 years of spectrum allocation.
Telecom operators already having 3G spectrum will have to follow same roll out obligation that were prescribed when it acquired 3G spectrum in 2010.
The DoT as per process will now place TRAI's recommendation before inter-ministerial panel, the Telecom Commission, which will give its view to Telecom Ministry.
The ministry then is expected to approach Cabinet for final approval.
