DoT writes to TRAI on spectrum pricing issue

New Delhi: The Telecom Ministry has sought clarifications on various points made by regulator TRAI on 'Spectrum Management and Licensing Framework' which will form the basis for spectrum allocation.

DoT has found variations in the points made by TRAI during course of its communication with the regulator on the issue of charging 'current price' for spectrum allocated to telecom operators.

TRAI on February 8, 2011 recommended April 1, 2010 as applicable date for charging the current price for spetrum allocated to GSM players in 1800 Mhz frequency band and CDMA players in 800 Mhz and 900 Mhz (GSM) frequency band.

Later on May 3, TRAI said the current price may be charged from the date of allocation in 2008-09, but subject to the outcome of various court cases.

The concept of current price was recommended by TRAI to determine valuation of spectrum in the frequency band where auction can be done to determine price of spectrum. The current price is to charged for excess spectrum allocated to telecom operators beyond prescribed limit, which in case of GSM players is 6.2 Mhz and 5 Mhz in case of CDMA players.

The Telecom Regulatory Authority of India (TRAI) has said that no current price is to be charged from the existing operators for assigning spectrum up to 6.2Mhz in 1800 Mhz band and up to 5 Mhz for CDMA during the validity of existing licences held by them.

TRAI has recommended that under new policy regime after renewal of licence, spectrum allocated beyond the prescribed limit of 6.2 Mhz for GSM players and 5 Mhz for CDMA players should be withdrawn. But DoT is not clear on the rationale for defining prescribed limit.

"...TRAI may indicate the rationale for defining the prescribed limit of spectrum," DoT said in a letter written to TRAI.

The Telecom Department has also found a contradictory view in case of mergers and acquisition guidelines.

DoT is confused over lock-in period for dilution of equity by a telecom service provider.

TRAI at one place has suggested removal of lock-in period of three years but at the same time has placed restriction in dilution of equity to a period of five years which DoT says is not in sync with objective of enabling mergers and acquisition policy regime.