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Thomas K Thomas

New Delhi, May 13 Admitting that it was at variance with the Finance Ministry over issues related to pricing of spectrum for both 2G and 3G mobile services, the Department of Telecom has sought the intervention of the Prime Minister’s Office to resolve the differences.

In a letter written to Mr T.K.A. Nair, Principal Secretary to PM, Prime Minister’s Office, Mr Siddhartha Behura, Secretary, Department of Telecom, said, “We are in dialogue with the Ministry of Finance regarding certain issues relating to guidelines for auction of 3G spectrum and pricing of 2G spectrum. I would be grateful if you could call for a meeting between Finance Secretary and myself at your convenience so that the issue can be given a final shape. I would also suggest that since recommendations of TRAI are involved in the matter, Chairman TRAI may also be called for this meeting.”

DoT and Finance Ministry have been at loggerheads over pricing spectrum with the latter wanting higher charges. The Finance Ministry has been pushing for auctioning 2G spectrum on the grounds that the price formula suggested by DoT was based on spectrum charges decided in 2003. It has concluded that for a pan-India operator, the circle fee fixed at Rs 357 crore per MHz should be inflated by a multiple of 3.5 times reflecting the growth in revenue per MHz between 2003 and 2008. The telecom ministry recently allocated 120 universal access service licences (UASL) for Rs 8,986 crore. The Finance Ministry has placed the real value closer to Rs 31,452 crore.

Finance Ministry’s view is that auctioning spectrum would be the best way to realise the true market value of a scarce resource such as radio frequency.

Finance Ministry has also told DoT that the annual revenue share for spectrum should be jacked up on the lines of the licence fee paid by mobile operators.

DoT, on the other hand, is convinced that the fee structured proposed by the Ministry of Communication will raise more than Rs 10,000 crore for the national exchequer.

On the third generation mobile policy, differences have arisen between DoT and the telecom regulator over allowing new players to participate in the auction. While DoT is in favour of opening up the bidding to new and foreign players, TRAI has suggested that the auction should be restricted to existing licence holders.

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