India’s five leading telcos Bharti Airtel, Vodafone, Idea, Uninor and Videocon have slammed the TRAI’s recommendations for spectrum auctions terming them as 'flawed, retrograde, regressive and uncertain”.
Reacting sharply to these recommendations, they demanded that all airwaves in the 1800 MHz band be put up for auctions, and the reserve price be slashed by 80%.
In a joint letter to the telecom minister Kapil Sibal the CEO’s of these telcos warmed the government that the steep hike in the reserve price for auction would result in the rise of tariff by 30 percent.
Regulatory Authority of India (TRAI) recently proposed a minimum or base price of Rs 3,622.18 crore for every mega Hertz of spectrum in the 1800 MHz band, where radio airwaves have been vacated following the Supreme Court’s verdict on February 2 cancelling all the 122 spectrum licences allotted in 2008 during the tenure of the former telecom minister A Raja.
Bharti Airtel CEO for India and South Asia, Sanjay Kapoor, Vodafone India MD and CEO Marten Pieters, Idea Cellular managing director Himanshu Kapania, Uninor chief executive Sigve Brekke and Videcon Telecommunications' director and CEO Arvind Ball, expressed fears that TRAI proposal, if accepted, will sound the death knell for Indian telecommunications and also lead to prolonged disputes and litigation.
"Holding back about 80% of the available spectrum and placing only 5MHz for auction in each service area, will result in a totally unrealistic and inflated market value caused through creation of artificial scarcity. By severely throttling the supply to 5MHz, Trai is trying to artificially distort the auction result, going against the directions of the Supreme Court," these telcos said.
“Trai had failed to 'appreciate that such high prices were completely unsustainable in a highly price sensitive market such as India, whose average revenue per user of less than Rs 90, had poor rural teledensity and required huge investments to rollout networks in rural and remote areas”, the letter said.
The various telcos’ lobbies are also crying foul over the TRA’s recommendations. GSMA on Friday said “Efforts to squeeze money out of mobile operators for some perceived short term gain will only reduce investment in networks, inhibit growth of mobile services and drive up consumer prices limiting the value the public will derive from the spectrum resource in the long term”.