TRAI Proposed Recommendations Will Hike Charges Of Mobile Telephony, Says Telcos

Major Telecom operators in India have jointly accused Telecom Regulatory Authority of India (TRAI) of imposing atrocious recommendations. Top executives of Bharti Airtel, Vodafone, Idea, Uninor and Videocon have blamed TARI for it’s “highly retrograde set of recommendations on spectrum auctions” that will invariably increase burden on customers.

Supreme Court had earlier cancelled all the 122 Licenses & issued strict guidelines to hold fresh auctions by 30th June. As the deadline approaches, many companies have begun to feel the burn. The CEOs have warned that, if implemented, the telecom sector will be irrevocably harmed & the consumers would be the ones who would have to pay as high as 30% more than the current charges.

What is TRAI suggesting? After cancellation of all licenses, TRAI has recommended a base price of Rs. 3,622.18 Crores (US$ 690 Million) for every unit of 2G spectrum in the upcoming auctions. This is 13 times higher than what telcos paid in 2008 (Rs. 1659 Crores)!  Of the available Spectrum, TRAI wants to let out only 5 MHz; that’s 80% less potential.

How can the crises be averted? The chiefs have recommended that all airwaves in the 1800 MHz band should be put up for auctions. Additionally, the reserve price should be slashed by 80% to allow the market to discover the ‘true’ price. In the market where the ARPU is less than Rs. 90, the companies might be right in offering such suggestions.

Will the Government prove right in implementing TRAI’s recommendations?

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