Regulators

TRAI brings out detailed paper on spectrum auctions

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NEW DELHI: The government should immediately take back the unused 900 MHz from the Bharatiya Sanchar Nigam Limited (BSNL) and from the Defence Ministry the unused spectrum in the 1800 MHz band, the Telecom Regulatory Authority of India (TRAI) has said.

In its recommendations on "Valuation and Reserve Price of Spectrum: Licences expiring in  2015-16", TRAI has also asked the Department of Telecom (DoT) to have a fresh look at the implementation of E-GSM band.



The entire 2x60 MHz in the 2100 MHz  band should be made available for commercial use.

 

The government should announce the roadmap for the auction of spectrum in 700 MHz band. This   should be done before the   conduct of  the   upcoming auctions in 900/1800 MHz band.

 

The MHz spectrum in 900 MHz band should be taken back from  BSNL from all the   Licence Service Area (LSAs), where licences expire in 2015-16 except in Punjab. In lieu, BSNL should be assigned 1.2  MHz in the  1800 MHz band only  in  those LSAs where its spectrum holding in  that band is  less  than 3.8  MHz in  this   band that is, in Gujarat, Rajasthan and West Bengal.

 

Unused spectrum in the Defence band should not be kept idle. In the LSAs, where spectrum assigned to Defence  in  the 1800 MHz band is  more than 20 MHz, DoT should coordinate with  Defence  for the vacation of spectrum held by Defence in excess of 20 MHz.

 

A dialogue needs to be held at the  level of the  Finance Minister, the  Minister of Communications and IT and  the  Defence  Minister to ensure the  availability of additional spectrum for commercial use.

 

At the outset, TRAI said the DoT had in April 2014 communicated that some of the Telecom Service Providers' (TSPs)  licences are due to expire during December 2015  and early 2016 and sought TRAI's recommendations on  the applicable reserve price for  all  the service areas for  auction of   spectrum in 900  MHz   and  1800  MHz   bands. After getting further information from DoT on certain points, TRAI had issued a consultation paper and received responses apart from an Open House Discussion.

 

The Authority has highlighted that the upcoming auction is critical for the Telecom Service Providers (TSPs) whose licences are due to expire in 2015-16. In  the 900 MHz  band, only  the spectrum held by  them is av ailable for  the  auction.

 

These licensees will have to win back this spectrum to ensure business continuity in a LSA; if they  don't, it places the  large  investment made in  the LSAs in jeopardy. The  continuity of services to millions of customers is also  at stake. In   this    backdrop, the   authority has  emphasised  the   need  to   make available additional spectrum before conducting the  auction.

 

TRAI now wants that the auction should be carried only after  a clear roadmap is  available for vacating spectrum in  2100 MHz  band from Defence  and in  900 MHz  band from BSNL.

 

The   forthcoming auction  should  be  scheduled  after   the   issues  related  to supply constraints are   resolved. Auctions in  the  800 MHz,  900 MHz,  1800 MHz and 2100 MHz band conducted simultaneously.

 

Auctions should not be held in Maharashtra and West Bengal for 1800 MHz spectrum at this stage as spectrum is  available in very  few districts in these LSAs.

 

The authority has reiterated its recommendation that the  frequency rearrangement in the  same band, from  within the  assignments made to the  licensees, should be permitted amongst all  licensees irrespective of  whether the   spectrum is liberalised or not. However,  the  use of spectrum shall be liberalised only if the entire spectrum holding of a licensee in a particular band is liberalised.

 

All efforts should be  made to make available spectrum in  contiguous form. In its recommendations, the authority demonstrated how  such contiguity can  be achieved in 7  LSAs in  the  900  MHz band. Nevertheless, the  entire available spectrum should be put to auction.

Spectrum should be  put to  auction in a block size of 2x200 KHz in both the 900 and 1800 MHz bands.

 

In  the 900 MHz band, the bidders should be required to  bid  for a minimum of

2x3.6 MHz in those LSAs where spectrum being put to  auction is  10 MHz or more and 2x2.4 MHz in the  remaining  LSAs.

 

Fresh valuation of  1800 MHz  spectrum for  all LSAs  is the  preferred way  to determine value and reserve price  of 1800 MHz  spectrum (and  for  900  MHz spectrum also)  for the  forthcoming auction.

 

The  average expected valuation of 1800 MHz spectrum of each LSA should not be lower than the  price realized in February 2014 auction in that LSA.

 

The value of  900 MHz  spectrum in each LSA  is  subject to  condition  that average expected value in  LSA should not   be  more than  twice  the  value of

1800 MHz spectrum in that LSA.

 

The reserve price for  1800 MHz spectrum in Rajasthan LSA should be fixed  at a discount of 30%  on  the reserve price calculated due to availability of partial spectrum (as was done in  the February 2014 auctions).

 

The   forthcoming auction  should  be scheduled after the issues related to supply constraints are  resolved. Auctions in  the 800 MHz, 900 MHz, 1800 MHz and 2100 MHz band conducted simultaneously.



Spectrum should be  put to  auction in a block  sjze  of 2x200 KHz in  both the

900 and 1800 MHz bands.



In  the 900 MHz band, the bidders should be required to  bid  for a minimum of 2x3.6 MHz in those LSAs where spectrum being put to  auction is  10 MHz or more and 2x2.4 MHz in the  remaining  LSAs.

 

Fresh valuation of  1800 MHz  spectrum for  all LSAs  is the preferred way to determine value and reserve price of 1800 MHz  spectrum (and for 900  MHz spectrum also)  for the  forthcoming auction.



The  average expected valuation of 1800 MHz spectrum of each LSA should not be lower  than the  price realized in February 2014 auction in that LSA.

 

The value of  900 MHz  spectrum in each LSA  is  subject to  condition  that average expected value in  LSA should not   be  more than  twice  the  value of 1800 MHz spectrum in that LSA.

 

The reserve price for  1800 MHz spectrum in Rajasthan LSA should be fixed  at a discount of 30%  on  the reserve price  calculated due to availability of partial spectrum (as was  done in  the February 2014 auctions)

 

To  accelerate the pace of investment, and to give  a fillip  to  the  penetration  of telecom services, the   reserve price   for  North   East LSA has been fixed   at a discount of 50%  on  the  reserve price  calculated.

 

The Recommended reserve prices for 1800 MHz and 900 MHz spectrum are  as tabulated  below.

 

RECOMMENDED RESERVE PRICE (PER MHz)

 

(Rs  in crore)



Orissa    c    23    47

*Reserve Price   not   recommended as spectrum is available in very few districts of LSA.

 

@ 900 MHz spectrum is not available j  not likely to be available in  Delhi, Mumbai, Kolkata and J&K  LSAs.  Hence, the reserve price has not been g1ven.

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