A high-powered ministerial panel headed by the Home Minister, Mr P. Chidambaram, has decided that the final call on issues like reserve price, spectrum usage charge and terms of payment will be taken by the Cabinet.

“The EGoM discussed three specific issues...EGoM is going to make a specific recommendation on each of these issues to the Cabinet, so that the Cabinet decides on it finally,” the Telecom Minister, Mr Kapil Sibal, told reporters here today.

The Empowered Group of Ministers (EGoM) will give its view on each of these issues to the Cabinet, which will then take a final decision on the matter.

In its last meeting, the EGoM had asked the Department of Telecom to prepare a matrix of reserve price in the range of Rs 12,000 crore to Rs 18,000 crore and calculate its impact analysis on the sector on the basis of spectrum usage charge in the range of 3 to 8 per cent.

However, the industry has raised concerns over the desired model.

“By changing the payment model to lower upfront charges, higher revenue share...will not address the fundamental issue that the price is unsustainable and will significantly increase cost and thus invariably tariffs,” the Cellular Operators Association of India Director-General, Mr Rajan S. Mathews, wrote in a letter to Mr Chidambaram.

TRAI proposal

The Telecom Regulatory Authority of India had recommended a minimum reserve price of over Rs 3,622 crore for auction of one Mhz of spectrum in the 1800 Mhz band, amounting to over Rs 18,000 crore for a pan-Indian operations in the case of a new entrant.

The high reserve price has been criticised by the industry saying that it would lead to tariff hike by up to 100 per cent in certain circles.

This auction is important for companies like Sistema Shyam Teleservices, Uninor and Videocon whose licences were cancelled by the Supreme Court as they have expressed interest in continuing businesses by participating in the auction mandated by the apex court.

(This article was published on July 20, 2012)
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