Hike in 2G spectrum price will impact mobile tariff

Since most of the incumbent operators will have to renew their licences in the next 3-5 years, they might have to shell out Rs 10,972.45 crore for acquiring start-up 2G spectrum as against to Rs 1,658 crore paid earlier.

The regulator’s decision is expected to impact mobile tariff as telecom companies may try to make it up by over-charging their customers for the calls.  

The Department of Telecom (DoT), while finalising the National Telecom Policy-2011 has sought the opinion of Telecom Regulatory Authority (Trai) on many spectrum related issues including pricing, sharing and extra spectrum holding by companies. With regard to one-time charge for additional spectrum beyond the contracted limit of 6.2 MhZ, the regulator has asked the DoT to take suitable decision on its own.

In its response to DoT, the Trai said government can decide about the charges on spectrum beyond the initial spectrum (6.2 MHz) by way of amending the licence conditions, the current price would be what has been estimated by the experts which is Rs 10,972.45 crore for pan-India licence.

In its recommendations earlier this year, the TRAI had said that each MhZ of additional spectrum, after the 6.2 MHz limit, held by operators should cost one-time Rs 4,571.87 crore (all-India).

However, it would vary from circle to circle and the operators would have to pay only for those where they hold extra spectrum. According to the regulator’s recommendations, all licences would have to pay for spectrum at the current price at the time of renewal of licences, or at price to be determined through auction or any other market-driven mechanism.

Trai said the price of spectrum in the 800 MhZ band and 900 MhZ band (both are considered to be of superior quality) would be 1.5 times of the price of 1,800 MhZ band spectrum.