Telecom regulator Trai today recommended auction of CDMA spectrum at reserve price of Rs 2,685 crore per megahertz, which is around 50 per cent higher than the previous pan-India base price.
The recommendations come after multiple rounds of discussions between the government and the regulator, which had earlier suggested that no auction be held for the 800 Mhz band, used by CDMA operators and 4G services, for want of takers.
"Authority recommends that the reserve price for the forthcoming auction of 800 MHz spectrum should be fixed at 80 per cent of the average valuation," Telecom Regulatory Authority of India said in its recommendation 'Reserve Price for Auction of Spectrum in the 800 MHz Band'.
It has recommended a reserve price of Rs 2,685 crore per Mhz, compared to around Rs 1,800 crore that was fixed for the auction in March 2013.
The last reserve price of CDMA spectrum was about 33 per cent lower that GSM spectrum in 1800 Mhz band at that time.
Trai has also imposed a condition that the government carve out a contiguous block of 5 Mhz frequencies before conducting the auction.
At present contiguous blocks are available only in 5 out of 22 service areas nationwide. They are Mumbai, Maharashtra, Madhya Pradesh, Assam and North-East.
According to CDMA telecom operators, harmonisation of frequencies may take months or even years, delaying the auction of 800 Mhz band. Arranging one block of contiguous spectrum will require reassignment of frequencies already by held by existing users.
During consultation process Tata Teleservices and Reliance Communications Ltd, who hold CDMA spectrum, told Trai "The process of shifting (frequencies) is cumbersome and will be much more intense as the customers will be impacted across multiple circles".
Sistema Shyam Teleservices (SSTL) had also said that the harmonisation process by government can take several months or even years because of which government can lose revenue that it can otherwise get as licence fee, spectrum usage charges and other cess charges for radiowaves.
SSTL was only bidder for the CDMA spectrum in March 2013 auction and won radiowaves to operate in 8 circles for Rs 3,639 crore.
Trai has recommended that the entire CDMA spectrum held by MTNL be put up for auction as it is underutilised.
The regulator has also suggested that government should take back of CDMA spectrum held by BSNL for auction except one block of frequency in Jammu and Kashmir, Assam and North-East service area.
Trai has also recommended that the auction be conducted in blocks of 1.25 Mhz and it should be mandatory for new entrants to win at least 5 Mhz of spectrum specially in the contiguous blocks.
"However, an existing TSP i.e. a TSP having some spectrum holding in the 800 MHz band should be permitted to bid for a minimum 1 block of spectrum. New entrants must be assigned the earmarked contiguous carriers only," Trai said.
It has recommended that Department of Telecom should put up the entire available spectrum in 800 Mhz, including that to be taken back from public sector telecom firms, for auction.
When contacted SSTL spokesperson said: "Given that the recommendations by Trai specific to the reserve price of 800 Mhz spectrum have just come out, SSTL is still in the process of going through all the details."