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TRAI proposes 10 percent hike in spectrum auction reserve price

New Delhi: The Telecom Regulatory Authority of India (TRAI) Wednesday recommended around 10 percent hike in the reserve price for 1800 MHz band spectrum auction compared to the last winning price in the February 2014 sale.

"In the 900 MHz band, only the spectrum held by them is available for the auction. These licensees will have to win back this spectrum to ensure business continuity in a licence service area (LSA); if they don't, it places the large investment made in the LSAs in jeopardy," the TRAI said.

It has set a price of Rs.3,004 crore per mega hertz for bandwidth to be auctioned in 18 service areas for the more efficient 900 Mhz band and Rs.2,138 crore per mega hertz for the 1800 Mhz band.

The auction is expected to take place in February 2015.

In the 1800 MHz band, 20 circles are going for auction, while in the 900 Mhz band, 18 circles will be up for sale.

TRAI said: "1.2 MHz spectrum in 900 MHz band should be taken back from BSNL from all the LSAs where licences expire in 2015-16 except in Punjab. In lieu, BSNL should be assigned 1.2 MHz in the 1800 MHz band only in those LSAs where its spectrum holding in that band is less than 3.8 MHz in this band, that is, Gujarat, Rajasthan and West Bengal."

The Cellular Operators' Association of India (COAI) - the GSM body - welcomed the recommendations for the forthcoming auctions and said: "It is clearly beneficial to the consumers and the future developments for the mobility industry in the country."

"We also appreciate the TRAI's acknowledgement of the need to conduct auctions in all available bands (800 MHz, 900 MHz, 1800 MHz and 2100 MHz) simultaneously as this will allow adequate supply and will also give more flexibility and choice to the operators to structure their operations and business plans," it said.

In December 2015, seven each licences of Idea Cellular and Reliance Communications, four licences of Bharti Airtel and six licences of Vodafone are scheduled to complete their 20-year term, beyond which they require renewal.

The recommendations said spectrum should be put to auction in a block size of 2x200 KHz in both the 900 and 1800 MHz bands.

"In the 900 MHz band, the bidders should be required to bid for a minimum of 2x3.6 MHz in those LSAs where spectrum being put to auction is 10 MHz or more and 2x2.4 MHz in the remaining LSAs," they added.

Earlier, a TRAI consultation paper said that around 184 Mhz of spectrum in 900 MHz band and 104 MHz in 1800 Mhz band would be put up for auction.

The revenue target set by the government in 2014-15 Budget from spectrum auction is to the tune of Rs.45,471 crore.In 2013-14, the total receipts from auction were of the order of Rs.40,847.06 crore.

In February 2014, in a 10-day auction of 900 MHz and 1800 MHz, the government mopped up Rs.61,162 crore.

Regarding releasing of spectrum by the defence sector, it said: "A dialogue needs to be held at the level of the finance minister, the minister of communications and IT and the defence minister to ensure the availability of additional spectrum for commercial use."

"Unused spectrum in the defence band should not be kept idle. In the LSAs, where spectrum assigned to defence in the 1800 MHz band is more than 20 MHz, DoT should coordinate with defence for the vacation of spectrum held by defence in excess of 20 MHz," it recommended.

It also mentioned that the government should announce the roadmap for the auction of spectrum in 700 MHz band. "This should be done before the conduct of the upcoming auctions in 900/ 1800 MHz band."

Release of 700 MHz will help in data growth in the country and in turn it will help in nationwide launch of fourth generation (4G) technology.

The TRAI also recommended that the reserve price for North East LSA may be fixed at a discount of 50 percent on the recommended reserve price.

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