The Department of Telecommunications (DoT) is likely to reject the telecom regulator's proposal to charge operators holding excess spectrum at a rate determined on the basis of the ongoing 3G bids.
The Telecom Regulatory Authority of India (Trai) had on May 11 recommended that firms with spectrum beyond the floor entitlement of 6.2MHz should be made to pay for the additional spectrum at an equivalent price to the 3G licence.
DoT is of the view that the efficiency of 3G spectrum is three times more than that of the 2G spectrum, so the price has to be accordingly discounted over 3G.
The move, if pushed through, could be a big relief to mobile service providers, who would have had to together pay more than Rs 14,500 crore if Trai's recommendations were accepted. Telecom operators, such as BSNL, MTNL, Bharti Airtel and Vodafone Essar, hold spectrum beyond 6.2 MHz in many circles.
According to Trai calculations, Bharti, which is on top of the list of operators holding excess frequency, may have to pay Rs 3,498 crore for the additional spectrum. It is followed closely by BSNL, which has to pay Rs 3,040 crore, Vodafone Essar may be charged Rs 2,849 crore and MTNL Rs 2,669 crore.
But, DoT plans to work out a new formula based on the efficiency of the spectrum.
"3G spectrum is three times more efficient than the 2G. It will be impractical to link the prices of the two. It has to be much lower than what Trai has recommended. Even Trai has said it could not arrive at a definitive conclusion on this issue, and pending further deliberations, it has suggested adopting the 3G price," said a senior DoT official, requesting anonymity.
According to some calculations, DoT may charge only one-third of the 3G price for the extra spectrum. In that case, the operators would have to together pay only Rs 4,500 crore, a figure many consider "reasonable" as compared with the Rs 14,500 crore they would have to pay if Trai's recommendations were accepted.
The auction of 3G spectrum began on April 9 and is continuing. The 3G bids are currently running at Rs 3,000 crore per MHz for one pan-India licence.
Even Trai members were divided on what to charge the operators for the extra spectrum. Some members had suggested it should be two-thirds of the 3G price, but there was no consensus.
While Trai eventually decided to peg the price on 3G auction, it also kept a window for deliberations open in the recommendations, by saying technical experts would be consulted on this matter later and a report will be issued on what is the right linkage of price.
Trai officials also said they were aware the price of 3G was hitting the roof. They said they could have waited for the final price to be out, but they decided otherwise.
Trai chairman J S Sarma, however, said the money sought from the operators for the additional spectrum was not that substantial and it represented the value of only one block of 3G spectrum. Also, he said, the operators were not being asked to pay with retrospective effect, but only for the remaining period of the licence, which was five to 10 years.
