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Telecom Commission to Discuss Spectrum Auction Plan on March 28

Telecom Commission to Discuss Spectrum Auction Plan on March 28

By Press Trust of India | Updated: 17 March 2016 12:45 IST

The Telecom Commission, an inter-ministerial body, is scheduled to meet on March 28 to discuss the next round of spectrum auction, which would see radiowaves worth Rs. 5.36 lakh crores put up for sale.

"The Telecom Commission meeting is scheduled for March 28. The agenda are being finalised. Spectrum auction will be discussed, along with a couple of other recommendations sent by Trai," an official source told PTI.

The Telecom Regulatory Authority of India (Trai) has suggested a plan for spectrum sale, expected to be held in July this year, which has a potential to fetch Rs. 5.36 lakh crores. It will be the biggest-ever auction in terms of value and is more than double the gross revenue of the telecom services industry.

Telecom service providers had a gross revenue of Rs. 2.54 lakh crores in 2014-15.

Trai has recommended a record high base price of Rs. 11,485 crores per MHz for the 700 MHz band. If all available radiowaves under this get sold at the Trai-suggested price, it alone will yield a whopping Rs. 4 lakh crores.

According to Trai paper, the cost of delivering mobile services in 700 MHz band is approximately 70 percent lower than 2100 MHz frequency, which is widely used for 3G services.

According to sources, a DoT panel studying Trai's recommendation has found some flaw in the methodology used by the regulator to arrive at the pan-India base price for 700 MHz, which suggests that the already record recommended price of the premium band could be higher.

The committee has found that in some telecom circles, including UP east, UP west and Bihar, Trai recommended around 40 percent lower price for 700 MHz band than 900 MHz band.

Spectrum is priced on the basis of its efficiency to carry mobile signals and eco-system of device and equipment available for its usage. The lower is the frequency band, the higher is its efficiency to carry long-distance signals.

The government expects a revenue of Rs. 98,995 crores from communication services in 2016-17, which includes proceeds from spectrum auction and other fees levied by DoT.

Trai has suggested spectrum price for all frequency bands that can be used for mobile services in India.

Another official said the commission may also discuss Trai's recommendations on virtual network operators (VNO) to operate in the country.

"It (VNO) is likely to be placed before the commission," the official said.

A VNO is expected to operate as a retailer for different telecom operators under one roof and provide one bill to customers for a host of services.

According to the proposals, a VNO would offer all telecom services permitted under new licences. It is expected to reduce marketing and sales costs of telecom companies struggling in the sector, besides sharing some operational expenses, too.

It may also offer some relief to telecom PSUs, BSNL and MTNL, which have already adopted a revenue-sharing model focusing on reducing capital expenditure.

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