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Industry body Ficci has termed spectrum charges finalised by the Cabinet as "anti-consumer" that could have "serious repercussion" for the telecom sector and asked it to have a re-look at the decision.
"Ficci believes the move is anti-consumer and harms competition. It will force the telecom companies to increase tariffs and substantially increase entrance barriers for new entrants thus adversely impacting competition," the industry body said in a statement.
The Union Cabinet, chaired by Prime Minister Manmohan Singh, has agreed to price 5 MHz of airwaves in the 1,800 Mhz band at Rs 14,000 crore and airwaves in 800 Mhz band at Rs 18,200 crore.
The price approved was 22 per cent lower than Rs 18,000 crore minimum rate suggested by the sectoral regulator Trai.
It was, however, 7 times higher than the price new companies had paid in 2008 to get spectrum from the then Telecom Minister A Raja.
Ficci said it is disappointed to see that an unreasonably high base price has been fixed by the Cabinet for the auction of 2G spectrum.
It was also critical of the government for not lowering annual fee on spectrum usage charges, which vary from 3 to 8 per cent of revenue earned by telecom operators.
"This will not only impact the overall health of the telecom industry, which is already reeling under severe financial stress, but also goes against the overall vision of the government to provide affordable telecom services to the masses," the Ficci statement said.
The government has taken a decision that goes completely against the spirit of the National Telecom Policy 2012, it added.
"Primary objective of NTP 2012 is the proliferation of 'affordable, reliable and secure telecom and broadband services in furthering the national development agenda while enhancing equity and inclusiveness', terming 'revenue maximisation as a secondary objective'," the statement said.
It added that while the NTP 2012 recognises the predominant role of the private sector, "the decision to set such abnormally high base price will further burden the already cash starved industry with increased debts."
Ficci urged government take a re-look at this decision "that has serious repercussion on the telecom sector that was once hailed as the poster boy of India's growth story."
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