Telecos split over Trai recommendations

Bhaskar Hazarika 

NEW DELHI: The GSM lobby seems to be unhappy with the 3G spectrum
recommendations submitted by the Telecom regulator and sees it in favour of the
CDMA operators. 

Bharti Airtel said that the reserve price quoted by the Telecom Regulatory
Authority of India (Trai) seemed to be very high for the operators. 

The base price for auctioning of spectrum for 3G services has been
recommended at Rs 80 crore for Delhi and Mumbai, Rs 40 crore for Chennai and
Kolkata and Rs 15 crore for other C category cities. 

“The reserved price however seems very high, even if we were to consider
the limited available spectrum. For those interested in countrywide 3G licences,
the reserved price would be more than Rs.1000 crores, which is a serious
disincentive especially when it comes to rural penetration. We appeal to the DoT
to review and seriously lower the threshold recommended,” Bharti Airtel said
in a statement. 

Spice Telecom feels the base price for the spectrum quoted is “too high”
for the operators. “If the price for allocation of spectrum is high, the cost
of the service will also go to customers. We feel the base price is quite high
for all the telecos,” H.N. Nanani, chief executive officer, Spice
Communications said. 

He also said that Spice will be bidding for the 3G spectrum in Punjab and
Karnataka. Spice has applied for a pan-India license this year. 

According to industry experts it is going to be a heated debate between the
GSM operators, and the Government and the CDMA operators on the other side. 

“Trai had done a balancing act by announcing the auction of the 3G
spectrum. If the regulator had recommended allocation of spectrum free, there
would have been no solution on allocation. Currently the government can allocate
spectrum only to five operators and it would have been impossible to select the
lucky five,” telecom analysts say. 

Even though the regulator's recommendations are considered 'logically
correct', industry sources said that the recommendations have been in favour
of the CDMA operators. The Ratan Tata and DoT spat over the spectrum allocation
policy had landed in the Prime Minister's Office (PMO) with DoT defending the
policy in its report to the PMO. Tata was the only industry player who has
proposed a charge for spectrum. In May 2005, he created a ripple in the industry
by proposing a Rs 1,500 crore fee for 3G spectrum.

Darryl Green, CEO- Tata Teleservices welcomed the Trai's recommendations.
“We are happy that the regulator has maintained an evidently technology
neutral approach. The recommendation on pricing and auction of spectrum clearly
establishes that spectrum is recognized as a scarce resource and must be
utilized efficiently,” Green said. 

He also said that the Trai's proposal on vacating spectrum to re-farm GSM
operations and in the process allocate additional spectrum, in the 800MHz band,
for CDMA players is a much needed and eagerly awaited solution. 

However, telecom major Reliance did not remain as a mere spectator on the
debate on spectrum allocation. The Anil Ambani Dhirubhai group had suggested a
hybrid model for 3G spectrum fee, according to which an entry fee of Rs 150
crore, Rs 100 crore and Rs 50 crore was proposed for Category A, B and C circles
respectively, making it a total of Rs 300 crore if a player wants to offer 3G
services Pan India. 

The two industry associations, Cellular Operators Association of India (COAI)
and the Association of Unified Service Providers of India (AUSPI) refused to
comment on the recommendations and said that they would soon be coming up with
suggestions on it. 

Meanwhile, Mahanagar Telephone Nigam Limited (MTNL), which is offering its
services in two metros, said that it would follow the DoT guidelines.