How Scarcity of Spectrum is set to benefit Government

EGoM has accepted the Telecom Commission’s recommendations for raising reserve price on spectrum auction. This is set to benefit the exchequer.

Looking forward to gaining better financial results from auctioning of spectrum for telecom services, the Empowered Group of Ministers (EGoM) on telecom has given green signal to the Telecom Commission’s recommendations for raising reserve price for the spectrum auction to be held in the month of January 2014, by up to 25 percent.

This comes close on the heels of a lukewarm response to the first two rounds of spectrum auctions in the month of November. Keeping the current recommendation in the background, the government is now looking forward to about Rs. 11,300 crore in the next round of auction.

Microwave spectrum is a natural resource and scarce availability of spectrum is seen as a big roadblock towards rolling out telecom services, globally as well as in India.

It may be recalled that earlier this month, the Telecom Commission proposed to hike the reserved price for 1800 MHz band of spectrum by 15% higher than recommended by India’s telecom watchdog, the Telecom Authority of India or TRAI. Telecom Commission has recommened the price 25% more for 900 mega hertz band.

In its bid to pass on the spectrum benefit to the end consumer, in the month of September 2013, TRAI had recommended about 60 per cent reduction for the reserve price for spectrum in the 900 megahertz band in some important cities. TRAI also suggested a 37 per cent cut in the reserve price for spectrum in the 1800 megahertz band.