TRAI 2G pricing recommendations illogical: Vodafone

TRAI 2G pricing recommendations illogical: Vodafone

"Instead of introducing a consistent approach to pricing of spectrum, the Telecom Regulatory Authority of India (TRAI) recommendations actually seek to introduce radically different approaches to charging for spectrum and despite the fact that all operators compete in the same market," the telecom major said in a statement.

As per TRAI’s recommendations, the price of 1800MHz spectrum varies from Rs 268 crore/MHz to Rs 5,943 crore/MHz, a differential of 2,200 per cent, with the differential going up 3300 per cent in case of pricing for 900MHz spectrum.

Last week, TRAI had recommended fixing the price for 6.2 Mhz of pan-India start-up 2G spectrum at Rs 10,972.45 crore, more than six times the present cost of Rs 1,658 crore.
The telecom service provider further added Trai’s recommendations will further aggravate the existing discrimination between GSM and the dual spectrum operators.

Under the TRAI recommendations, although the dual spectrum operators have 10-40 per cent more spectrum than Vodafone Essar, they should pay insignificant amounts as one-time spectrum fees.

As per the TRAI proposal, Vodafone Essar would pay a fee /MHz for spectrum over 6.2MHz which is 257 times higher than the fee paid by Reliance.

"The methodology adopted by the Committee is conceptually flawed and contains obvious errors," Vodafone added.

Dual spectrum operators and new licensees would pay 8 per cent of 3G prices, and we would pay up to 205 per cent of the 3G price for the same spectrum. This is completely "unfair and unjustifiable," the company added.

Under the current licence conditions, there is no limit of 6.2MHz. Hence it is erroneous to refer to it as "contracted spectrum". On this issue, the TDSAT has dismissed a petition in December 2010 that GSM operators held spectrum beyond contracted limits.

"TRAI cannot impose one-time charge with retrospective effect from April 1, 2010," the company said.

TRAI had also said every Mhz of additional spectrum (on an all-India basis) beyond the contracted limit of 6.2 Mhz would cost a massive Rs 4,571.87 crore.

Most of the telecom firm, including Bharti, Vodafone, Idea and state-owned companies like BSNL and MTNL, hold extra spectrum beyond 6.2 Mhz and the new norms would put a huge financial burden on these telcos.