2G spectrum price hike: Lose-lose game for all

NEW DELHI, INDIA: As the TRAI released the much awaited guidelines on 2G auction, it took industry by surprise. The regulator has pegged the spectrum valuation nearly seven times higher that what the government has got from the 3G auction.

The regulator, this time, isn’t zealous to allocate radio waves to incumbent players holding excess spectrum. With this move, the large operators are likely to bear the brunt. The telcos whose licences were quashed by the top court need to pay nearly ten times for the same quantum of spectrum.

Also read: 2G auction: Supreme court sets Aug 31 deadline

The telecom industry believes that it’s an unwelcome move, and wouldn’t help government’s ambition to bridge digital divide.

The regulator itself isn’t sure on how aggressively telcos would bid in the proposed auction. Instead, TRAI chairman JS Sarma said, “We are optimistic that operators would get good ROI after getting hold of radio waves.”

Also read: 2G auction value pegged at Rs 7 lakh crore

Speaking to CIOL, industry veteran and COAI chief Rajan S Mathews said that the valuation is high though the auction will be based on the base price. “This would neither be beneficial for the industry nor consumers,” he said.

“If such is the attitude of regulator, there may be a pressure on tariff,” Mathews said. COAI believes that future roadmap depends on who would win the bid and on what pricing. The operators, he said, would start looking at re-farming of spectrum resources.

“It seems a disruption and both- the existing players and new entrants- will eventually feel the heat,” Mathews said. Going forward, COAI feels that subscribers are likely to feel upward pressure. It’s an unwelcome move, he added.

AUSPI expresses deep anguish, desperation and disappointment on TRAI proposals. These recommendations, it said, will adversely impact public interest and considerably eliminate competition and would lead to monopoly of tariffs and create non-level playing field.

The consumer, who has reaped the fruits of unfettered competition would be the loser, it said. New operators who would be expected to pay such high amounts would be worse affected. “Thousands of people are likely to lose jobs while investments of thousands of crores in networks and infrastructure would go down the drain,” AUSPI added.

Sistema Shyam TeleServices said that they are studying the TRAI recommendations.