The Telecom Commission has proposed to discover price of 2G spectrum through an auction instead of the formula suggested by TRAI, the telecom regulator.
The move to suggest the auction route follows representation by the incumbent operators against the TRAI formula. The telecom regulator had suggested that all operators which own more than 6.2 Mhz in a circle should be asked to pay a one-time fee.
The TRAI had proposed Rs 4,571 crore per Mhz on a pan-India basis to be calculated on a pro rata basis for the remaining period of the licence. Based on this method, operators such as Bharti Airtel would have to pay about Rs 3,500 crore because it has more than 6.2 Mhz spectrum in a number of circles.
The operators, in a letter to the Telecom Minister, Mr Kapil Sibal, said that there is no legal basis for TRAI to conclude that a one-time fee is payable beyond 6.2 Mhz.
The Commission has submitted its recommendations to Mr Sibal. The proposal will now be sent to Cabinet for approval. Price for spectrum in 800 Mhz and 900 Mhz will be 1.5 times that of the price discovered through the auction route.
The Commission has also recommended a uniform licence fee of 8 per cent of annual revenues instead of 6 per cent suggested by the TRAI. However, it has accepted the TRAI's proposals on mergers & acquisitions. TRAI had recommended that M&A will be allowed as long as the merged entity's market share does not cross 35 per cent. In case the market share goes over 35 per cent but less than 60 per cent, then it will need TRAI approval. Under the new policy, spectrum sharing will also be permitted.