CDMA operators body Association of Unified Telecom Service Providers of India (Auspi) on Thursday said the "exorbitantly high reserve price", proposed by sectoral regulator Trai, will put an end to India's telecom growth story.

In a letter to Department of Telecom Secretary R Chandrashekhar and newly appointed Trai Chairman Rahul Khullar, Auspi said it is extremely concerned that the Authority has "ignored the ground realities for near terms of market assessment" and societal needs till 2017.

Despite pressure from the industry, Telecom Regulatory Authority of India (Trai) has stood by its recommendations of a base price of Rs 3,622 crore per megahertz (MHz) pan-India spectrum for 1800 Mhz band (being used for GSM service).

This is almost 10 times higher than the price at which 2G licences bundled with 4.4 MHz spectrum were allocated in 2008 by then Telecom Minister A Raja.

The comments come amid allegations by rival body Cellular Operators Association of India (COAI) (GSM operators representative body) that the revised recommendations were "flawed and biased" and favoured a few dual technology players.

Trai gave some concession to CDMA operators slashing the reserve price of 800 MHz spectrum (which they use to offer services) at 1.3 times the 1800 MHz reserve price, from 2 times proposed earlier.

However, Auspi said the pricing of the 800 Mhz band is also not realistic and it would not be sustainable and viable to provide liberalised spectrum based services with the additional spectrum cost, without significantly increasing tariffs.

Auspi has estimated that CDMA based services tariff will have to be increased by 217 per cent to offset additional cost of spectrum.

"The impact on tariff could range from 241 per cent to 310 per cent of current tariff if negative elasticity is also taken into account," it added.

Auspi has suggested that the reserve price for 1800 MHz may be kept at Rs 3,500 crores for 5 MHz spectrum and let the market discover its true value.

"As 800 MHz has lesser potential for revenue generation due to less developed eco system for this band, the reserve price should be much lower than the 1800 MHz spectrum band and should be at 1/3rd 1800 MHz reserve price," it said.

Auspi alleged that instead of recommending modalities for auction of 2G band as directed by the Supreme Court, Trai has created a new concept of liberalised spectrum (4G) and proposed an exorbitantly high reserve price, while allowing only one (in some circle up to two) new operators as against 6-7 whose licences were cancelled.

"The recommendations, if accepted in its present form, will put an end to telecom growth story," it added.

Auspi said an artificial scarcity of spectrum should not be created and suggested that no spectrum should be reserved for refarming the 900 MHz spectrum held by PSUs (MTNL and BSNL) at this point of time.

The licences of private operators are due to expire between 2014 and 2016, while BSNL and MTNL licenses are due for expiry in 2017 and 2020.

"No useful purpose would be served to reserve 1800 MHz spectrum till 2020 ie for almost 8 years when PSUs licenses are expiring. 8 years is sufficient time to get the 1800 MHz spectrum band vacated from Defence and other Government agency for refarming of BSNL and MTNL," it said.

Old operators like Bharti Airtel, Vodafone and BSNL will have to use high frequencies of 1800 Mhz band for transmitting signals for mobile services compared to 900 Mhz band frequency which they use at present.

"After reserving spectrum in 1800 MHz for refarming of licenses expiring till 2016, at least 8 slots of 2x1.25 MHz should be auctioned in all circles," it said.