Trai for new 3G rules, auction delayed

NEW DELHI: The Telecom Regulatory Authority of India (Trai) wants the rules for 3G (third generation) telecom services changed, just when the Department of Telecommunications (DoT) is gearing up to conduct the auction process for introducing 3G in India.

Trai has asked all available spectrum including anticipated spectrum to be auctioned, “so as to maximise the number of 3G operators”.

So far, DoT has been talking about auctioning only the available spectrum for 3G services, which left many states and operators out.

Among the major changes, the regulator is in favour of charging telcos an annual administrative fee of 2% of the highest bid amount for 3G.

Also, Trai has said that the government must be transparent about the availability of spectrum, and that it should come upfront on how much it expects to get within the next one year.

The spectrum availability status should be put in public domain for the knowledge of bidders, the regulator stressed. DoT’s timetable suggests that 3G would be conducted around January-February 2009, but the fresh recommendations from Trai may upset the calendar.

As DoT is expected to deliberate over the Trai recommendations, the 3G auction process is all set to be delayed. The country would hold general elections in April-May 2009, and the government would have liked to maximise revenues from allocation of 3G licences and spectrum before the polls.

Already under fire for issuing 2G licences earlier this year on a first-come-first-serve basis, communications minister Andimuthu Raja may not dismiss the Trai recommendations this time, sources said.

Trai has given its recommendations in response to a reference made by the DoT in November. According to Trai, a standalone 3G operator would need to pay an annual spectrum charge of 3% of its annual adjusted gross revenue (AGR), and an annual administrative fee of 2% of the highest bid. 

As for the 2G operators who get into 3G services, an annual administrative fee of 2% of the highest bid will be imposed. Their annual spectrum charge fee would be the same as 2G operators need to pay —-3% of AGR for up to 4.4 MHz spectrum in the case of GSM operators and 2.5 MHz for CDMA players; 4% for 6.2 MHz (GSM) and 5 MHz (CDMA), 5% for up to 8 MHz, 6% for up to 10 MHz, 7% for up to 12.5 MHz, and 8% for up to 15 MHz.

Trai has agreed with the latest DoT view that 2G and 3G revenue cannot be segregated, and therefore spectrum charges cannot be calculated separately for those offering both 2G and 3G services.Trai for new 3G rules, auction delayed

Therefore, for such operators revenues will be taken collectively for 2G and 3G, for calculation of annual spectrum charges. As for administrative charge, Trai has said “it is considered appropriate by the Authority to link such administrative charges with the highest bid amount which reflects the market price of the spectrum.”

It has prescribed a one-year moratorium for all 3G operators for paying the administrative fee. Last month, the Telecom Commission had decided that 2G operators would need to pay an additional 1% of their revenues as annual spectrum usage charge for holding up to 8 MHz, and 2% more for beyond 8 MHz of spectrum.

The same annual spectrum usage charges was to apply to those 2G operators which eventually get 3G spectrum as well. The stand-alone 3G operators were to pay a total of 3 per cent of their revenue as annual spectrum charge, the Telecom Commission had said.

Some industry insiders argued that if the government were to accept the fresh Trai recommendations on 3G, it would end up losing Rs 4,000 crore over a period of five years.

The loss figure has been worked out by some stakeholders by comparing the administrative fee proposed by Trai and the earlier guideline of 1% additional revenue share fee for 3G spectrum.