TRAI sticks to its guns on spectrum reserve price

The TRAI today minced no words in its response to the Department of Telecom’s view that the proposed sharp cut in reserve price of 900 and 1800 Mhz spectrum was based on assumptions that did not stand scrutiny. In a hard hitting response, TRAI rejected the government’s contentions and blamed a series of man-made policy mistakes for bringing the sector down to its knees, reports CNBC-TV18's Siddharth Zarabi.

Earlier this month, MF Farooqui, secretary, DoT, had written to TRAI chairman Rahul Khullar seeking clarifications and reconsideration of some of recommendations provided by the regulator in September this year.

Based on an assessment by a panel of its officers, the DoT had said it would not be appropriate to conclude that the 1800 Mhz spectrum sold during the last two auctions was a distress purchase and that the auction price was not the true market price. In response, the TRAI said it had adopted objective and scientific methodologies for arriving at the valuations which are grounded in economic theory and have widespread international acceptance.

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On the 900 Mhz band reserve price, the TRAI said it was puzzled by the DoT’s observations that there was no clear basis to the recommendations. “Perhaps a re-reading will provide the necessary clarity”, it told the DoT today.

The regulator also made it clear that it cannot support the idea of providing any sort of reservation to incumbent operators in future auctions. “The idea is to have an open, transparent, objective, responsive, unrestricted and successful auction of 900 and 1800 Mhz spectrum and to ensure a level playing field amongst bidders”, it said. This could well prove to be bad news for the likes of Bharti Airtel and Vodafone amongst others.

The authority has reiterated that no further CDMA or 800 Mhz band spectrum should be auctioned until the feasibility of extended GSM (E-GSM) is explored in India. It has also stuck to its recommendation for a gradual transition towards a uniform three per cent spectrum usage charge. This may be a mixed bag for the likes of Reliance Jio Infocomm.

But it is the last word in the epilogue that is vintage Rahul Khullar. “Howsoever unpleasant it may be, the truth that we need to face is we have lagged behind the rest of the world just when we had begun to catch up. There is a telecom revolution under way in many parts of the world. By conservative estimates, we are 5-10 years behind.”

Khullar ends by quoting Shakespeare:“There is a tide in the affairs of men, which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our ventures.”

Meanwhile, CNBC TV18 learns that the DoT will now go back to the drawing board on the spectrum reserve price and auction timeline. Sources said that a final call would be taken by the Cabinet and a formal proposal would be prepared for its decision soon.