The Indian government has reduced the controversial reserve price for 2G spectrum in the upcoming auction, but the GSM Association says the rate is still too high.
India is re-auctioning 122 licences which were cancelled after a corruption scandal surrounding their original sale in 2007. Some rules for the auction have already been published, but the vital issue of the minimum price remains hotly disputed, and makes it almost certain that the auction will not go ahead by the deadline, August 31, as set by the High Court.
A special committee or ’empowered group of ministers’, led by home minister P Chidambaram, has been examining the issues and last week proposed a reserve price of between INR140bn and INR160bn ($2.5bn to $2.9bn) for a nationwide 2G licence. This was well below the INR180bn ($3.2bn) proposed earlier in the year by the regulator, TRAI. Operators reacted furiously to that suggestion, saying it would lead to higher prices for consumers or make it impossible for them to get a return on their investment, given India’s notoriously low ARPUs.
The group of ministers has also suggested reducing the upper limit of the annual spectrum usage charge to 3%-6% of revenue, down from the current level of 3% to 8% (for GSM or CDMA). The cabinet will make the final decision, probably within two weeks, but the GSMA still believes the changed proposals have not gone far enough.
‘This price range is still prohibitive and we remain concerned that over the long term it will hamper the delivery of high quality, affordable and innovative mobile services across the country,” said Anne Bouverot, director general of Association, in a statement. “Alongside our member operators, we urge the cabinet to adhere to international best practice when taking a final decision, to bring the greatest benefits to India’s economy, society and its people.’