The empowered group of ministers (EGoM) will meet on Monday to decide on the contentious issue of reserve price of spectrum. Union agriculture minister Sharad Pawar will chair the meeting.
The panel was earlier scheduled to meet on June 21 but the meeting was cancelled after the then finance minister Pranab Mukherjee declined to chair it after being nominated as the UPA candidate for the upcomg Presidential elections.The EGoM will have to take its decision within a week to complete the auction process by August 31, the deadline set by the Supreme Court for spectrum auction.
The meeting will focus on the issue of the reserve price of auction. The Supreme Court had earlier directed the Telecom Regulatory Authority of India (TRAI) to give its recommendations on the modalities of auction.
The TRAI under the chairmanship of JS Sarma, had, in April, submitted its recommendations to the Department of Telecommunications (DoT). The regulator had suggested a reserve price of R3,622 crore per MHz of spectrum. This means that a company will have to pay at least R18,000 crore for pan-India spectrum of 5 MHz, about 10 times more than what they had bid in 2001.
The TRAI had also calculated its impact on tariffs at up to four paise per minute.
Telecom service providers, however, opposed the regulator’s recommendations on grounds that tariffs will go up drastically, by as much as 90 paise in some circles.
The DoT asked Sarma’s successor Rahul Khullar to again work out the impact of spectrum pricing on tariffs. In its report, Khullar has supported Sarma and said that the impact of tariff will not be more than five paise per minute.
Rajeev Chandrasekhar, Rajya Sabha MP and former chairman of BPL Cellular, has also criticised operators who are opposing the reserve price recommended by the TRAI.
He also said that the cost of spectrum as percentage of total project cost was very low. “This is the reason that operators are reducing 3G tariffs despite paying a much higher spectrum price,” said Chandrasekhar. “Spectrum constitutes a small fraction of a project’s revenue.”