The empowered group of ministers (EGoM) headed by finance minister P Chidambaram on Thursday decided to partially take back the premium spectrum in 900 MHz band from the incumbent operators and auction it.
The operators will be allowed to retain only 2.5 MHz of spectrum. However, this will come at a cost.
The operators will have to pay at the market price determined by auction.
This would bring in around Rs. 100,000 crore to the government coffers over a period of 10 years, depending on the bids and the payment schedule.
This will adversely impact the incumbent players mainly Bharti Airtel, Vodafone and Idea as they hold spectrum in the premium band. This decision will not have any impact on the rest five to six players.
The move may not have any impact on consumers as tariff is driven by competition and only two players in a circle have spectrum in the premium 900 MHz band.
But, a PricewaterhouseCoopers (PwC) statement said: “The partial spectrum refarming could result in a detrimental impact on consumers through higher prices as well as poorer quality of service.”
The exact impact on the companies will be depend on their decision to bid for it. The auction is likely to take place in the first half of 2013.
Telecom Commission had earlier approved that the operators should be allowed to hold 2.5 MHz of spectrum. The department of telecommunications (DoT), however, recommended two options including retaining either 5 MHz spectrum in 900 band or 2.5 MHz.
Association of Unified Access Service Providers representing Tata Teleservices and Reliance Communications support refarming, while Cellular Operators Association of India representing GSM service providers is opposed to it.