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Mobile boom justifies spectrum price?

india Updated: Jun 20, 2012 22:43 IST
Manoj Gairola

In the last 11 years, the cost of spectrum per subscriber has come down by less than 1% of what it was in 2001, when the last auction of 2G spectrum took place.

There were about four million mobile subscribers in 2001. The companies had bid Rs. 1,650 core as reserve price for 2G spectrum for pan-India operations. There were four operators in the country.

At present, there are about seven licensees providing services to about 850 million subscribers (subscribers of new operators whose licences have been cancelled following the Supreme Court verdict is not counted). They have paid Rs. 14,850 crore as the licence fee (as two are dual licence holders). So the cost per subscriber comes out to be only 0.99% of what it was in 2001.

"This clearly shows that there is a strong case for revising the price of spectrum," said BK Syngal, former chairman and managing director of Videsh Sanchar Nigam Ltd (VSNL).

The Telecom Regulatory Authority of India (TRAI) has recommended a reserve price that is about 10 times more than what the companies had bid in 2001. Telecom service providers are opposing it saying that it is very high. TRAI says that its impact on pricing will be hardly four paise per minute.

Rajeev Chandrasekhar, Rajya Sabha parliamentarian and former chairman of BPL Cellular has criticised the operators who are opposing the reserve price recommended by TRAI.

"Industry will never like to pay for the spectrum," said Chandrasekhar. "This is for the first time that the regulator has done a scientific calculation on the spectrum pricing. The industry has not come out with any solid evidence showing that TRAI's calculations are wrong."

He also pointed out that the cost of spectrum as percentage of total project cost is very low.