Telecom watchdog suggests six-fold hike in spectrum fee
By IANSWednesday, February 9, 2011
NEW DELHI - The Telecom Regulatory Authority of India (TRAI) has proposed a six-fold hike in the fee charged for scarce spectrum, or airwaves, on mobile phone service firms in two stages of up to 6.2 megahertz and beyond, leaving the industry worried.
Against a price of Rs.267.51 crore companies had to pay for each megahertz, the watchdog has recommended Rs.1,769.75 crore per megahertz for up to 6.2 megahertz, and Rs.4,571.87 per megahertz for any additional spectrum.
This validity of the fee is for 20 years, as earlier.
For a pan-India spectrum of up to 6.2 megahertz - the least amount of radio frequency telecom companies generally hold - they may have to pay Rs.10,972.45 crore. For frequencies beyond that, they may have to pay the incremental amount of Rs.4,571.87 per megahertz.
Hertz, kilohertz, megahertz and gigahertz are units that measure among others aspects radio frequencies that carry signals used for television, radio, telecom and a host of other civilian and defence services.
Most firms, including the state-run Bharat Sanchar Nigam, Mahanagar Telephone Nigam, Bharti Airtel, and Vodafone hold spectrum above 6.2 megahertz and the financial burden on them could be all the more higher.
The proposal from the watchdog — based on the suggestions of a four-member expert panel, all of them professors at leading institutions — is recommendatory and not binding on the government.
The watchdog also took note of the fact that since May 2010 it has suggested the cancellation of as many as 43 licences and legal examination of similar exercise on 31 others, and said this should release additional spectrum.
The authority recommends that these prices may be made applicable from April 1, 2010, pro rata, for the remaining validity of the respective licences while charging for excess spectrum, the watchdog said in a letter to the Department of Telecom.
Insofar as the price of spectrum up to 6.2 megahertz is concerned, the estimated figures given by experts will also be relevant for renewal of existing licences subject to the condition that these will be duly adjusted for inflation.
The suggestions come against the backdrop of a major scam in the award of airwaves for second-generation (2G) telecom services that led to the resignation of A. Raja as telecom minister in November last year and his subsequent arrest.
The official auditor had estimated that the policies followed during his rein had resulted in a loss of between $12.8 billion and $40 billion to the exchequer for allegedly misusing office and favouring some telecom companies.
