TRAI stands by 6-fold jump in 2G spectrum prices

In a development that could put massive financial burden on mobile service providers, telecom regulator TRAI today stood by its recommendation of over six-fold jump in 2G spectrum prices.

TRAI had earlier this year recommended Rs10,972.45 crore for the contracted 6.2 Mhz spectrum for pan-India licence as against Rs1,658 crore paid by operators till the last round of allocation of licence in 2008.

The Department of Telecom (DoT) had sought clarifications from the Telecom Regulatory Authority of India (TRAI) on the spectrum pricing before finalising the National Telecom Policy 2011.

In its response, TRAI said, "...should the government decide to charge the 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..."

With regard to additional spectrum beyond the 6.2 MHz limit, each MHz of additional spectrum held by operators should cost one-time Rs4,571.87 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.

Most of old licences are due for renewal in the next 3-5 years and operators would have to pay as per the current prices recommended by Trai. This would put extra financial burden on the service providers.