TRAI wants to know if methods used for earlier spectrum auctions need change

NEW DELHI: The Telecom Regulatory Authority of India (TRAI) wants to know from stakeholders if additional spectrum in contiguous form in the 900 MHz and 1800 MHz band should be made available and whether only contiguous blocks of minimum 5 MHz spectrum should be put for auction.


In a consultation paper on Valuation and Reserve Price of Spectrum: Licences expiring in 2015–16 issued today, TRAI has also asked what the block size should be to auction the spectrum in (a) 900 MHz band and (b) 1800 MHz band.


The paper, which poses several questions for stakeholders, has to be replied to by 8 September with counter-comments if any by 15 September, after which an Open House would be held on the issue on 22 September in Delhi.


The paper has been issued following a query by the Department of Telecommunications in April this year.


Stakeholders have been asked to give views on what should the minimum quantum of spectrum in the 900 MHz and 1800 MHz band that (a) a new entrant and (b) an existing licensee should be required to bid for.


It also wants to know if the licensee whose licences are due for expiry in 2015 and 2016 should be treated as an existing licensee or as a new entrant and should the valuation exercise for 1800 MHz spectrum be undertaken afresh for all the 22 LSAs.


TRAI wants to know if the prices revealed in the February 2014 auction for 1800 MHz spectrum auction be taken as the value of 1800 MHz spectrum for the forthcoming auction in the respective LSA, and whether it would be appropriate to index it for the time gap (even if this is less than one year) between the auction held in February 2014 and forthcoming auction.


The regulator wants to know the criteria for defining a ‘market clearing price’ and whether the valuation of spectrum and determination of reserve price should be done only for those LSAs where market clearing price was not achieved for 1800 MHz spectrum in February 2014 auction.


Should the auction determined price for LSAs where market clearing price was achieved in February 2014 be taken as equal to the value of spectrum and should the market determined price be taken as the value of spectrum in all LSAs, TRAI wants to know.  


It also wants to know the value of spectrum in the LSAs where market clearing price was not achieved by correlating the sale prices achieved in similar LSAs where market clearing price was achieved with known relevant variables.


Should the value of spectrum in 1800 MHz band be assessed on the basis of producer surplus on account of additional spectrum, and is there any need for a change/revision of any of the assumptions adopted by the Authority in producer surplus, asks TRAI.


It also wants to know whether the revenue surplus approach should be used to arrive at the value of 1800 MHz spectrum and should the values contained in the report of 8 February 2011 for spectrum up to 6.2 MHz be incorporated after indexation in the calculation of the average value of the 1800 MHz spectrum in the current exercise.


Would it be appropriate to value 1800 MHz spectrum as the simple mean of the values thrown up in all the approaches and should the value of 900 MHz spectrum be derived on the basis of the value of 1800 MHz spectrum using technical efficiency factors (1.5 times and 2 times), it wants to know.


Can there be any other method that could be used for arriving at the valuation of the 900 MHz spectrum, it asks. 

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