What are the Implications of Initial Telecom Commission Recommendations ?
Telecom Commission did not make any decision on spectrum pricing but has asked the TRAI to clarify on the basis of High Reserve price for spectrum as well look into the Economics of operation rather than just maximizing revenues for the state.
Telecom Commission has initially made the following recommendations and is about to leave the Spectrum Pricing to the Ministerial Panel headed by the Prime Minister of India. Here is our take on the initial recommendations of the Telecom Commission,
- Auctioning of 2 or more slots/circle would not lead to any artificial scarcity of demand (which could have been created by TRAI’s recommendations of auctioning 1 slot / circle.
- Give a fair and realistic chance to operators like Uninor and Idea that have lost licenses and are interested in reapplying for spectrum.
- Reduce the possibility of spectrum refarming, as currently there would not be adequate 1800 MHz spectrum available to replace the 900 MHz as and how it comes for renewal.
Finally, if DOT accepts TRAIs recommendations on spectrum pricing, we see a higher possibility of the auction failing , as it is unlikely that 2 or more slots / circle would be successfully bid in all the circles. Spectrum liberalization is unlikely to help any operators in the near term, as there are not many affordable 3G or 4G handsets supporting the 1800 MHz band.
