Panel for 15-25% hike in reserve price of airwaves

Overruling the recommendation of Telecom Regulatory Authority of India (Trai), the Telecom Commission has suggested a hike of 15-25% more than what the telecom regulator had proposed for the reserve price, in select circles.



The inter-ministerial panel, which met on Wednesday to take a call on the reserve price issue among others in the telecom spectrum auction suggested 15% increase in the reserve price of 1800 MHz spectrum in some circles Delhi, Mumbai, Kolkata, Andhra Pradesh, Gujarat, Karnataka, Maharashtra and Tamil Nadu, and 25% in the reserve price of 900 MHz spectrum to be auctioned in Delhi, Mumbai and Kolkata.



Last month, in response to the Department of Telecom (DoT's) request, Trai stuck to its earlier recommendation that the government should cut the reserve price sharply for the upcoming 900 MHz and 1800 MHz spectrum auctions.



It had rejected the government's request to reconsider its recommendations that the reserve price for spectrum in the 900 MHz band in some key areas be reduced by 60%.



Furthermore, Trai had suggested a 37% cut in the reserve price for spectrum in the 1800 MHz band.



The commission has also gone against the Trai recommendation not to auction the spectrum in the 800 MHz band. However, it has broadly accepted the new merger and acquisition policy, suggested by an internal committee of the DoT. Now a final call on the issues will be taken by the empowered group of ministers (EGoM).



The last two auctions conducted in November last year and early this year had failed miserably on account of high reserve price. According to industry experts, the then reserve price of Rs3,622 crore per megahertz (MHz) for 1800 MHz band spectrum recommended by the selfsame Trai made it unaffordable for telcos.



The Cellular Operators Association of India (COAI) said that though the operators would still be bidding at this price, a lower price would have ensured a more aggressive bidding.
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