World mobile body warns against high spectrum prices

London-based GSMA feels that Feb auction may not be in the interest of consumers and growth

prahlad

Prahlad Rao | January 23, 2015 | New Delhi



India’s mobile service providers have received strong support from the world body over high price of spectrum and a skewed auction policy scheduled next month.

The GSM Association, which represents nearly 800 mobile operators and allied industries all over the world, calls the Indian government’s pricing as short-term measure that may result in high prices and inferior mobile experience for consumers.

Ignoring Telecom Regulatory Authority of India (TRAI) rate of Rs 2,720 crore per Mhz for 3G spectrum, the inter-ministerial panel Telecom Commission had fixed base price of Rs 3,705 crore and less quantum of airwaves are being put for auction.

“The GSMA is concerned by the action of the Telecom Commission to increase reserve prices for India’s 2100MHz spectrum auction next month – almost 36 per cent higher than those recommended by the Telecom Regulatory Authority of India (TRAI). Moreover, the proposal by the Government to only put 2x5MHz of spectrum in the 2100MHz band up for auction, versus GSMA and TRAI recommendations to auction at least 2x20MHz of the band, risks further distorting the outcome of the auction to the disadvantage of India’s citizens,” said Tom Phillips, Chief Regulatory Officer of London-based GSMA.

“While high auction prices may generate short-term revenues for the government, in the longer term they will negatively impact the development of India’s mobile networks and delay investment in infrastructure, resulting in higher retail prices and an inferior mobile experience for consumers.

“It is well documented that mobile broadband has the potential to deliver substantial socioeconomic benefits. According to GSMA Intelligence, in 2014 alone, the overall economic impact of mobile technology in India amounted to approximately US $115 billion in value-added terms, representing an economic contribution of  around 5.5 per cent of the country’s GDP last year.

“Looking ahead, mobile broadband is set to grow exponentially throughout India, driving digital inclusion and economic growth for India’s consumers and businesses. By the end of 2014, 3G coverage reached 61 per cent of India’s population and it is set to escalate substantially to 90 per cent by 2020. Similarly, while 3G and 4G connections only represented 11 per cent of all mobile connections by Q4 2014, this will increase almost four-fold to 41 per cent by 20201.

“However, the GSMA cautions that these forecasts will only become reality if mobile operators have the capacity to make the necessary network investment in India. We hope that the Indian Government will set realistic prices for next month’s auctions to maximise long-term economic and social gains. There is still time to lay the foundations for a truly Digital India that will benefit the lives of citizens and businesses,” the statement of Phillips said.

The government should give a transparent account of why it intends to charge a high price for the services, which will in the end become burden on eh consumer. Disregarding the advice of a trade organization in a globalised world does not make much sense.

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