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Manoj Gairola, Hindustan Times
New Delhi, July 17, 2012
When the empowered group of ministers (EGoM) on telecom meet on Wednesday, they may find it difficult to ignore the Rs. 18,000-crore reserve price that the telecom regulator has recommended for 5 MHz of spectrum in the 1800-MHz band — which it has defended as many as three times since April.

The Telecom Commission, the highest decision making body in the sector, has not raised any objections to the TRAI recommendations. The commission has simply left the decision to the EGoM, headed by home minister P Chidambaram.

On April 23, the regulator submitted its recommendations to the department of telecommunications (DoT) after the Supreme Court ordered cancellation of 122 licences issued http://www.hindustantimes.com/Images/Popup/2012/7/18_07_12-buss21.jpgby A Raja when he was telecom minister.

The Telecom Regulatory Authority of India (TRAI) under JS Sarma recommended a reserve price of Rs. 18,000 cr for auction.

It said the impact of the high price on call rates would not be more than 4 paise per minute.

The industry, however, said the call rates would go up by as much as Re 1 per minute.

Since then DoT has twice sought analyses from TRAI on the impact of the new pricing on tariff for consumers. In the interim, Sarma retired, and the new TRAI chairman Rahul Khullar has strongly defended the reserve price. In a presentation before the EGoM on July 12, Khullar said the impact on consumers will not be more than 5 paise per minute in call rates.

"In the case of 3G auctions, after paying 10 times the price of 2G spectrum, each of the companies has launched voice services at a tariff which is equal to or lower than the prevalent 2G voice tariffs," Rajya Sabha MP Rajeev Chandrasekhar pointed out in a letter to Chidambaram.

Moreover, since TRAI is a statutory body, "ignoring it would be to undermine its authority," said BK Syngal, former CMD of VSNL.

Another important issue that is to be decided by the EGoM is whether incumbent operators should also pay for all the spectrum held by them at the new rate. This issue was never sent to the telecom commission, and DoT sent it directly to the EGoM for a decision.