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TRAI for higher reserve price than DoT

business Updated: Jul 14, 2008 20:37 IST

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After agreeing to DoT's proposal on doubling the reserve price of 3G spectrum for a pan-India license, Telecom regulator TRAI today suggested a slighter higher price for the same based on a fresh calculation.

"As per the Economic Survey 2007-2008, the Gross Domestic Product (GDP) at current price is Rs 42,83,000 crore. Taking 0.5 per cent of GDP as the reserve price for a block of 2x 5 MHz, the amount will be around Rs 21,415 crore. DoT may like to revisit this assertion," said Telecom Regulatory Authority of India in a letter to Department of Telecom (DoT).

Earlier the Dot in a letter to the telecom watchdog had said, "the reserve price for a block of 2 x 5 MHz in the 2.1 GHz band should be 0.5 per cent of GDP, which in the case of India, would come to USD 0.5 billion or about Rs 2,100 crore," which was twice of what TRAI had earlier recommended.

Growth of telecom should be treated as vehicle for transformation of economy and society as a whole and therefore is complementary and cannot be estimated as standalone contribution.

The Authority is of the view that incidence of financial burden should be estimated in totality and isolated or piecemeal hikes with a view to mopping up additional revenue may hurt the growth of infrastructure and in the long run the telecom sector itself.

However, as the reserve prices are only to fix the minimum price and the final price is determined through the auction process, therefore, the Authority in order not to further delay the process of roll out of 3G services in India had agreed with the reserve price proposed by DoT, TRAI explained as the reason behind it agreeing to DoT's proposals.

The TRAI had, in principle, agreed with the DoT on the proposed auction process.