Trai wants a sixfold price increase for 2G spectrum

NEW DELHI: The Telecom Regulatory Authority of India (Trai) today proposed to the government a hefty increase in the price of 2G spectrum that service providers use for mobile telephony.

In its recommendations to the Department of Telecommunications (DoT), Trai has recommended an all-India spectrum price to Rs 17.7 billion ($391 million) per megahertz for up to 6.2 MHz and to Rs 45.72 billion per MHz for spectrum beyond that.

Telecoms firms have paid an estimated Rs 2.68 billion per MHz so far in previous allocations. 
The regulator had on 11 May last year in its recommendations on ‘Spectrum Management and Licensing Framework‘, recommended that mobile carriers pay a one-time fee for holding 2G radio spectrum beyond 6.2 MHz based on 3G prices but then said it would do further study on spectrum prices and submit fresh proposals.

It, thereafter, set up a four-member expert committee which submitted its report "The 2010 value of spectrum in 1800 MHz band" on 30 January. Trai, thereafter, sent a letter to telecom secretary pricing the spectrum in the 1800 MHz spectrum.    
Although Trai‘s proposals are not binding, this will have a major effect on the industry as the start-up price is more than six times the present cost of Rs 16.58 billion.

Trai had in November last year recommended cancellation of 38 licenses and legal examination of the feasibility of cancelling 31 more licenses holding spectrum in frequency band of 1800 MHz as well as 800 MHz bands. If these cancellations take place, it will be possible for the government to auction surplus spectrum and treat the auction price as the relevant price of spectrum beyond 6.2 MHz for the given licensed service area. 

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