The government is likely to opt for auction of the 900 MHz and 1800 MHz bands in this fiscal and leave the decision on 800 MHz band for the new government.
Top government officials, involved in the decision making, described the issues surrounding 800 MHz as “a can of worms” which should be delinked for one round of auctions to go through now.
The 900 MHz and 1800 MHz bands are the ones on which almost all telecom service provider companies in India operate. While the Telecom Regulatory Authority of India (Trai) had suggested a 60 per cent and more cut in the reserve prices of these bands from the earlier set prices to attract stronger bids, the inter-ministerial group of secretaries — the Telecom Commission (TC) have suggested a 15 to 25 per cent rise. These are the prices at which the auctions are expected to begin in January 2014. The Commission will, meanwhile, ask a Group of Ministers to refer back to Trai to decide the prices at which the 800 MHz band should be auctioned as well as charges for spectrum usage. All these will be decided by Trai, which has a long-drawn process of consulting all stake holders before deciding on the base prices.
These auctions mean a lot to the government that aims to earn at least Rs 11,000 crore non-tax revenue in FY14 from it to ensure its target of fiscal deficit at 4.8 per cent of GDP is maintained.
A senior government official said that the government does not have the time to wait till Trai decides on the base price for 800 MHz spectrum. Trai has a problem in deciding upon any price for 800 MHz.
The reserve or base price for pan-India spectrum in the 800 MHz band was slashed to Rs 9,100 crore for the auctions held in March this year after the government failed to attract any bidder at the Rs 18,200 crore base or start price at the previous auction in November 2012.
The Trai has two options. If it increases the price, the winner could cry foul at having to bid at higher price. If it doesn’t there will be comparisons with 1800 MHz where similar small parcels of spectrum are to be auctioned at higher prices.
The official added that Trai would only get into the pricing of 800 MHz after the TC’s decision gets clearance from the Cabinet. The