Trai seeks 15% hike in CDMA base price

NEW DELHI: India's telecom regulator has recommended increasing the reserve price of CDMA airwaves to Rs 3,104 crore per unit, 15% higher than its proposal in February, irking operators that sought a reduction as an impetus for the lesser-used platform.
The Telecom Regulatory Authority of India (Trai) carried out a fresh valuation of spectrum in the 800MHz band based on a change in the revenue mix of operators, which indicated a higher contribution from data usage since its previous suggestions made nine months ago and its recommendations in October on the reserve price for the 1800MHz band.
"The significant increase in the growth of data usage cannot be ignored," the regulator said, while suggesting the higher reserve price. "Projected subscribers' growth also needed revision in the light of current data/trends."
Trai's recommendations will go to the Department of Telecom (DoT), which will decide on the final reserve price.
The Trai-proposed pan-India price for airwaves is 72% higher than the floor price of Rs 1,820 crore in the 2013 auction of the 800MHz band, where Sistema Shyam Teleservices, among the only pure-play CDMA operators in India, secured spectrum in eight circles. The regulator had proposed Rs 2,685 crore per unit as the base price in February, prompting an outrage from CDMA players, following which DoT sent it back to Trai for reconsideration.
"At this price, which is 1.5 times that of 1800MHz floor price, it seems unlikely that there would be any buyers," said Ashok Sud, secretary general of the Association of Unified Telecom Service Providers of India (AUSPI), an industry lobby group. "There is a real danger that there would not be an auction. We're going to urge the DoT not to accept these recommendations."
Trai has priced the CDMA band in the metro circles of Delhi and Mumbai at Rs 494 crore and Rs 352 crore per unit of airwaves, respectively, about 37% and 7.3% higher than the 900MHz base price in the February auctions. However, the base price in Kolkata of Rs 117 crore is still lower than floor price of Rs 125 crore. The DoT had also sent back Trai's proposals on the 900MHz and 1800MHz bands, which are due to be auctioned early next year, on which the regulator reiterated its earlier stand on all suggestions.
The 800MHz band has been used by Reliance Communications, Tata Teleservices and Sistema Shyam to offer voice calls using CDMA technology. It has traditionally been considered less valuable than 900MHz and 1800MHz, which are used to offer GSM services.
The regulator has priced 800MHz aggressively because these airwaves can be used to provide high-end data on 4G technology and are considered to be efficient.
The regulator has reiterated its stand on most recommendations apart from the reserve price. It has suggested, again, that the entire 800MHz spectrum available with the DoT should be put up for auction.
The regulator has also stood by its recommendation that the entire CDMA spectrum held by state-run Mahanagar Telephone Nigam Ltd be put up for auction because it is underutilized and that the government should take back and sell CDMA spectrum held by BSNL, except one block in Jammu & Kashmir, Assam and the North-East service areas.