TRAI raises 2G spectrum reserve prices significantly

India’s telecom regulator, the TRAI has set a reserve price for 2G radio spectrum auctions that is 10 times higher than the level previously set by the disgraced former telecom minister, A Raja.

Although expected to be higher, the scale of the increase has surprised commentators.

A pan-Indian licence in the 1800MHz band would cost around Rs3,622 crore (US$680 million) if approved. The TRAI has recommended a reserve price for 800MHz and 900MHz bands that will be at least double that set for the 1800MHz band.

A licence in the 900MHz band would cost Rs7,244 crore.

The radio spectrum auction is taking place after the Supreme Court earlier voided 122 licences that had been awarded in 2008 in controversial circumstances, which it ordered to be resold via auction.

The proposals, which still need to be approved by the government would however also liberalise the spectrum from technology constraints, which would – in theory – enable bidders to run 3G services over the 900 and 1800MHz bands.

Those holding 1800MHz spectrum – or likely to acquire it – will also be able to make a payment to liberalise it from being restricted to GSM services only.

However, there will be a re-farming of the 900MHz spectrum held by the existing networks so that it can be offered to their rivals – which they have repeatedly objected to. The re-auction of the 900MHz spectrum is then proposed for the first half of next year.

The auction of 1800MHz bands should be carried out "as early as possible", the regulator wrote – which could enable it to meet the time limit imposed by the Supreme Court.

Further blocks of 1800MHz spectrum that can be re-farmed, as well as 2.1GHz spectrum will be sold off in second half of next year.