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Battle lines for the next big telecom war has been drawn with the industry split into two camps on the latest consultation by the telecom regulator on issues related to spectrum, including pricing, trading and re-farming.
On one side are the older GSM players such as Bharti Airtel, Vodafone and Idea Cellular and the other side is Mukesh Ambani-led Reliance Jio.
Reserve price
While incumbent operators have pushed their case for reducing the reserve price for the next round of spectrum auction, Reliance Jio has taken a view that there was no justification for a reduction.
“As per TRAI’s own calculations, the spectrum pricing contributes to 4 paise per minute only. Any downward revision in reserve price at this stage will create a non-level playing field for the licensees who have bought spectrum in November 2012, as the Govt is not going to refund any money to them,” Reliance Jio said in its submission to the TRAI.
However, incumbent players said that mobile tariffs would go up by 26 paise if the reserve price was not reduced.
“The failure of November 2012 and March 2013 auctions where the reserve price was derived based on the final price of 3G spectrum makes it amply clear that 3G spectrum prices were unrealistically high and, therefore, should not be used to determine the valuation of spectrum in 2013,” said Bharti Airtel.
Re-farming issue
On the issue of spectrum re-farming, the existing players want the regulator to rethink on the policy. The Department of Telecom has already decided to shift existing operators out of the more efficient 900 MHz band and put it up for auction. However, the TRAI has re-opened the discussion in the consultation paper giving another chance for the incumbent players to voice their opinion.
“Any 900 MHz auction is not only untenable under the existing policy and licensing regime,” said Vodafone.
Countering this Reliance Jio said the Government has already decided to do re-farming and the same has also been incorporated in National Telecom Policy – 2012.
“Therefore, there is no need to revisit this issue at this stage. Also, DoT has not sought any fresh recommendations of TRAI on the issue of re-farming in its present reference to TRAI,” it said.
S.C. Khanna, former Secretary General of the Association of Unified Telecom Service Providers of India, backed Reliance Jio’s stand on re-farming.
“The licences with spectrum in 900 MHz were given to them at a nominal price. These licences were for 15 years which were extended to 20 years at the time of migration under 1999 Telecom Policy. Therefore, these companies have no right for further extension of these licences.”
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