Price, refarming may hurt 900 MHz spectrum auction: COAI

Rajan Mathews, director general, Cellular Operators Association of India (COAI), says that the current pricing of 900 MHz of spectrum is completely out of line and secondly, the legal issues with regards to refarming of 900 MHz also needs to be sorted out. Unless, these issues are addressed players will not be interested for bidding at the auction.

Below is the edited transcript of his interview to CNBC-TV18.  Q: Do you think will government once again, like CDMA auction, revise downwards the auction price for the 900 MHz spectrum? A: There are two reasons for players not being interested for bidding for 900 MHz spectrum, first, the pricing is way out of line and secondly, the legality of what the government has called a refarming. Q: Do you want the legal aspect to be sorted out first? If the reserve price was actually brought down then you are fine to go ahead and participate in the auction? A: First, a legal issue with regards to reframing exercise has to be sorted out. Members of COAI are not averse to the market discovered price for the spectrum but legal issues need to be addressed as was decided by the high court on last Friday. The court gave the Department of Telecommunications (DoT) time of 20 days to come back with a response to the legal issues raised by the operators and then the operators can decided how they want to proceed legally on this matter. Q: You are saying you are not opposed to the government arriving at a market-determined price. Our sources within the government also seem to suggest exactly that, but they are not clear as to how they are going to be able to arrive at that market-determined price. How would you like the government to arrive at the market-determined price? A: I think first of all we need to get back to the Telecom Regulatory Authority of India (TRAI) - that is the entity that really should take a comprehensive look at the whole matter and determine that given what we have seen in three proposed rounds; one actual and two proposed.  Look at what is happening internationally just last week, we saw a dismal failure of the United Kingdom (UK) government to do principally the same thing and rationalise the whole process of what is an appropriate reserve price instead of sort of hit or miss. I think that is the way forward in terms of a rationale approach to this. Q: In a sense you are essentially saying scrap the auction which is slated to take place in March. Go back to the drawing board, go back to the regulator and lets start this process all over again? A: That’s what would be appropriate way to go as opposed to hit and miss on pricing being the sole criteria of how to proceed. Q: Reserve price cut of almost 80 percent is what you seek now? A: At least that much because we keep telling the government the reserve price is a reserve price. It is not the final price. Why are you putting a reserve price that is so close to what you expect to be the final price? If you look at what happened at 3G, that is exactly what happened, the reserve price was substantially below the final price that was obtained in the auction. I think that is a good model to follow in this particular instance as well.