This week the Telecom Regulatory Authority of India (TRAI) released a new set of recommendations that could have serious implications on the new telecom players like Videocon, Telewings (erstwhile Telenor) and CDMA players like Sistema Shyam. TRAI has apparently slashed the prices of relatively more efficient 900MHz spectrum by a hefty 60% in prime regions of Delhi, Kolkata and Mumbai. Though it has slashed prices of even the legacy 1800MHz spectrum band, it is by 37% only. Such discrepancy will surely hit telecom companies, but it will pinch the new players a lot severely as compared to seasoned ones like Bharti Airtel, Vodafone, BSNL and MTNL.
The reduction in base prices comes at a very odd time. Companies had already bid and secured the legacy 1800MHz spectrum that is mandatory for operating 2G Telephony last year in November. By rough estimates with present reductions, companies like Sistema Shyam might have shelled out as much as Rs 1400 Crores (US$ 219 Million), while Telewings could have paid Rs. 1300 Crores (US$ 203 Million) more.
Are new players marginalized?
It appears to be the case, exclaimed Arvind Bali, CEO, Videocon Telecommunications, “If we had known TRAI was going to change the policy to make 900-MHz spectrum so cheap and to ensure enough was available for auction, we would not have bid for the 1,800-MHz band. Now we are stuck. The government should refund the difference to make it viable for us to operate”
Telecom companies, in the past, have shut shops since they couldn’t afford to continually shell out high amounts for spectrum. Had Government or TRAI listened to their woes and reduced their asking prices then, we could have a lot many players competing for customers, ensuring an average telecom subscriber got the best of services. However, with this untimely reduction, has TRAI been unfair to the telecom players as well as its customers?