Stung by a series of scams, the Telecom Ministry will approach Cabinet for a final decision on the controversial issue of spectrum pricing and also one-time charges for extra spectrum held by leading mobile service providers.
"We have finalised our views on the spectrum pricing and soon the matter would be taken up in the Telecom Commission... and once the Telecom Commission decides on the matter, I will go to the Cabinet for consensus," telecom minister Kapil Sibal told PTI.
Telecom regulator TRAI had in February this year recommended an over six-fold increase in the cost of start-up spectrum as well as extra airwaves held beyond the contracted limit of 6.2 Mhz by some leading service providers, including Bharti, Vodafone, Idea, BSNL and MTNL, in different circles.
According to TRAI, the initial 6.2 Mhz of spectrum would now cost Rs 10,972.45 crore for pan-India operations, compared to Rs 1,658 crore earlier. Furthermore, every Mhz of additional spectrum (on an all-India basis) beyond the contracted limit of 6.2 Mhz would cost a massive Rs 4,571.87 crore.
Most of the telecom firms, including Bharti, Vodafone, Idea and state-owned companies like BSNL and MTNL, hold extra spectrum beyond 6.2 Mhz and the new norms would put a huge financial burden on these telcos.
In addition, the licences of some of the operators, including Bharti, are due for renewal after completing 20 years periodicity in several circles. Such companies would have to pay to renew their licences as per the new norms recommended by TRAI.
Asked whether DoT is taking this matter exclusively to the Cabinet for its approval, Sibal said "No, no, I think general policy decisions also be informed to the Cabinet to tell that this is what we intend to do."
He, however, declined to comment what was the DoT's decision on TRAI's recommendations. Sources in-the-know said an internal committee of the DoT was in favour of TRAI's report on several issues.
Leading operators like Bharti and Vodafone had slammed the regulator and termed the recommendations absolutely "irrational".
Within days of TRAI's recommendations, Bharti Group Chairman Sunil Mittal had said, "We completely reject these propositions. How can 2G spectrum price be 800 per cent of 3G prices? There is no rationality in it."
A similar response was garnered from Vodafone, which asked the government to dump TRAI's report on spectrum pricing. The Cellular Operators Association of India (COAI), a lobby for GSM service providers, has been maintaining that it was like "changing the goal posts in the middle of the game."
Bharti is facing a financial burden of nearly Rs 8,000 crore if the new recommendations are implemented in toto, while state-owned BSNL would take the maximum hit of over Rs 15,000 crore due to the extra spectrum held by the firm.
TRAI has said that the prices should be implemented retrospectively from April 1, 2010. All recommendations are for spectrum in the 1800 Mhz band.
Last year, TRAI had said that spectrum held in the 900 Mhz band should be priced at 1.5 times the price of spectrum in the 1800 Mhz. This would put an additional burden on telecom firms.