Trai's suggestions on reserve price for spectrum auction

Trai, in its recommendations, states that the Department of Telecom (DoT) should come out with a clear roadmap indicating the quantum of spectrum, which will be made available in the future. So that licenses, which are up for renewal in 2015-2016 can make an informed decision about bidding for the spectrum in the 1,800 MHz band.

Trai says there will be no reservation of spectrum for the renewal of licencees in the 900 megahertz (MHz) or the 1,800 MHz band. No priority will be accorded to these licencees in the bidding process and all bidders should be treated alike. Also Read: Govt asks TRAI to reconsider cap on ads on channels
The Department of Telecommunications (DoT), through its reference dated July 10, 2013, had sought Trai's recommendations on the applicable reserve price for the auction of spectrum in the 800 MHz, 900 MHz and 1800 MHz bands.
The Block size in 1800 MHz auction is 2X200 KHz. Trai also says existing licencees will have to bid for a minimum of three blocks. New entrants have to bid for a minimum of 25 blocks of 2x200Khz each.
The block size in 900 MHz auction is 2x1 MHz. As per Trai’s recommendations, each bidder must bid for a minimum of five blocks in 900 MHz auction.
Trai has retained eligibility norms of November 2012 and March 2013 auctions.
Trai says spectrum trading should be permitted, which allows even private entities to sell or lease airwaves for services. The regulator was earlier of the opinion that allowing spectrum trading might result in anti-competitive conduct through hoarding of spectrum  or consolidation or an incumbent may Debar newcomers from providing service by buying out the spectrum required for services. It further recommends flat spectrum usage charge.
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Another key point is the reserve prices that are now being recommended by Trai for the 1,800 MHz band spectrum. In Delhi, the reserve price per MHz is being quoted at Rs 175 crore, followed by Mumbai which is Rs 10 crore lesser. Then a steep drop in Kolkata, which is at Rs 59 crore, Andhra Pradesh at Rs 130 crore, Gujarat at Rs 115 crore, Karnataka Rs 124 crore, Maharashtra at Rs 138 crore, Tamil Nadu Rs 166 crore, which makes it the second highest so far.
The total Pan-India 1,800 MHz band spectrum per MHz pricing as recommended by TRAI is Rs 1,496 crore. This is slightly lower than the last reserve price of the 1,800 MHz band that had been recommended.
The total all India 1,800 MHz band spectrum price for 1 MHz is recommended at Rs 1,496 crore. As far as the 900 MHz band is concerned, which is seen as a more premium band in terms of spectrum efficiency and quality, Trai is saying that Delhi reserve price should be Rs 288 crore that is a significant mark up over the 1,800 valuation of Rs 175 crore. Mumbai is a bit lower at Rs 262 crore per MHz and Kolkata at Rs 100 crore, while Kolkata was at Rs 59 crore. That is the index difference.
The authority has also recommended that there is no need for determining a valuation or corresponding reserve price for 800 MHz spectrum at present. Trai has also said that the payment term should be structured by the government to address financing issues of the bidders in the proposed auction, in effect saying stamping the regulator’s nod for deferred payment or a staggered payment schedule for the auction.
The Trai has said that spectrum acquired through auction or trading route on which a transfer of spectrum price has been paid at a prescribed market value to the government should not be added to any existing spectrum holdings for determining the applicable slab rate. This will also apply to spectrum allocated in the auctions held in November 2012 and March 2013.
So there is good news for all that has happened already in terms of the spectrum usage charge with respect to the spectrum that has already been acquired in the previous two auctions of November 2012 and five months later in March of 2013.