Telecom CEOs warn mobile tariffs may double

Call TRAI recommendations fallacious

PTI | May 8, 2012



Mobile call rates would double in some circles if the recommendations of sectoral regulator Trai on spectrum pricing are accepted, telecom CEOs who met Telecom Minister Kapil Sibal warned on Tuesday.

"...there will be circles which will have more than a 100 per cent price rise (in tariffs) if they were to absorb the impact of what is being recommended," Bharti Airtel CEO Sanjay Kapoor told reporters here.

"In one circle, the cost of spectrum, the reserve price is Rs 7 crore and on other end, there are metros where it is Rs 717 crore, which is a 100 times differential," he said.

The chiefs of Bharti Airtel, Vodafone India, Idea Cellular, Uninor and Videocon met Sibal and Department of Telecom Secretary R Chandrashekhar to discuss the implications of Trai recommendations.

Top officials of CDMA operators Sistema Shyam Teleservices, Reliance Communications, Tata Teleservices and CDMA body AUSPI also met the minister earlier in the day on the same issue.

Kapoor said, "The discussion was about 2 things -- one is the Trai recommendations made on the reserve price and auction, and basically (its saying) that the recommendations will have an impact of 2 paise on the industry, and the other was about refarming."

Trai has not considered the price elasticity of demand while formulating the 2 paise assumption, he said.

"As the prices rise, the consumption goes down. And it has been absolutely assumed as if the consumption will remain constant which is not correct," Kapoor said, adding that there is a 30 paise per minute impact and not 2 paise as Trai has assumed.

The Telecom Regulatory Authority of India (Trai) has suggested a base price of Rs 3,622 crore for one megahertz (MHz) for pan-India spectrum.

This is around 10 times higher for pan-India operations than the price at which 2G licences bundled with 4.4 MHz spectrum were allocated in 2008 under the then telecom minister A Raja.

Kapoor said Trai has taken into consideration only 576 Mhz in the 1800 Mhz band for calculations, whereas in reality 1167.40 Mhz of spectrum is at play.

"Now the difference between what Trai has taken is three times apart because Trai has taken Rs 93,000 crore into cognisance whereas the cost of spectrum that I just mentioned is more than Rs 2,84,000 crore," he added.

Alleging that an artificial scarcity is being created, Kapoor said, "Only 20 per cent is being auctioned in the market which clearly tells you that an artificial scarcity is being created and therefore the prices will be taken up unrealistically."

On Trai recommendation on re-farming the spectrum, under which operators will be migrated to a higher frequency band, Kapoor said the industry will have to invest Rs 1,25,000 crore of capex and Rs 25,000 crore of operating cost additionally to just protect the existing revenues.

"This will also include write-offs of Rs 25,000 crore worth of assets which will not be used by the industry because 900 (Mhz) will not exist," he added.

Trai has proposed roadmap for spectrum re-farming under which existing player will be made to use 1800 Mhz band, compared to the lower frequency band of 900 Mhz.

Telecom signals emitted using 900 Mhz frequency band cover large area and is therefore cost-efficient, compared to 1800 Mhz band.

Comments

 

Other News

`Focus on infra, reforms, digital connectivity has created strong foundation for growth`

In a step towards the operationalisation of the Bharat Audyogik Vikas Yojana (BHAVYA), union minister of commerce & industry Piyush Goyal launched the BHAVYA Portal on Monday in New Delhi.   Addressing the gathering, Goyal said that the BHAVYA scheme will adopt a competit

Govt, RBI announce major reforms to attract FPI

The finance ministry on Friday announced a series of measures aimed at enhancing the ease of investment for individual Persons Resident Outside India (PROIs) and Foreign Portfolio Investors (FPIs), and to attract stable long-term foreign capital flows.   Building on the recent in

Lessons in climate adaption from world’s largest inhabited river island

Majuli Island, perched between the Brahmaputra River to the south and east, the Subansiri River to the west, and a branch of the Brahmaputra to the north, has been severely affected by recurrent flooding and intense riverbank erosion. Despite its global importance in acquiring UNESCO tentative status for

Careless whispers and the impossible trinity

Time can never mend, the careless whispers of …    As the RBI marches ahead, for the upcoming monetary policy meeting this June, whispers from the corridors echo around several policy options to defend the rupee – by deploying forex reserves, raising in

Bullet Train Project: Third mountain tunnel breakthrough achieved

A major engineering milestone has been achieved in the Mumbai–Ahmedabad Bullet Train Project with the successful breakthrough of the third mountain tunnel (MT-07) at Ambesari village in Dahanu Taluka of Palghar district, Maharashtra.   With this achievement, three mountain

Supreme Court gets five new judges

Five new judges were appointed to the Supreme Court of India on Monday. "Vide Notifications of even number dated 01.06.2026, in exercise of the powers conferred by clause (2) of Article 124 of the Constitution of India, the Hon’ble President of India is pleased to appoint (i) Shri





Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter