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EGoM Decides To Partially Reallocate Airwaves

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The Empowered Group of Ministers (EGoM) on spectrum said mobile phone carriers will have to give up their airwave holdings beyond 2.5 mega hertz of spectrum in the superior 900 mega hertz band at the time of their permit renewals, news agency Reuters reported, quoting a government source.

Market leaders Bharti Airtel Ltd and Vodafone's India unit — two of the country's oldest carriers — will be hit the most by the proposed refarming or substituting of their more efficient 900 MHz band airwaves with inferior quality 1800 Mhz band airwaves starting in November 2014.

However, the plan to allow them to retain some of the spectrum may give carriers some relief, compared with an earlier proposal to replace all their holdings.

The issue of refarming the 900 MHz spectrum was expected to be sorted out at least a week before the auctions start on 12 November.

Earlier, last month, just hours before telecom operators were to submit their bids for the auction of spectrum in the 1800 MHz band, the EGoM had decided to impose a one-time fee for spectrum over 4.4 MHz on operators, a step which is expected to fetch over Rs 10,000 crore to the exchequer.

It also decided to impose a one-time fee for spectrum above 6.2 MHz from 2008 till the time of auction. This will be indexed to the 2001 prices of spectrum (Rs 1,651 crore) using the prime lending rates of SBI. For a government struggling to manage its finances, the net gain of about Rs 30,000 crore from the fee will be welcome.

This will be in excess of Rs 27,000 crore surcharge to be imposed on GSM carriers having spectrum in excess of 4.4 MHz and CDMA operators with 2.5 MHz airwaves.

The base price for spectrum in the upcoming auction is more than seven times than what carriers paid in earlier sales where airwaves were bundled with telecom permits.

The EGoM, headed by finance minister P Chidambaram, includes defence, telecom, I&B and law ministers as members. Manish Tiwari and Ashwani Kumar are the new information & broadcasting and law ministers after the Sunday's Cabinet reshuffle.

Refarming recommended by the Telecom Regulatory Authority of India (Trai) had called for existing operators to give up all their spectrum in 900 MHz band when their permits come up for renewal starting November, 2014.

The operators were to be given the option to buy replacement airwaves in the less efficient 1800 MHz band.

The DoT has sought clarifications from TRAI due to various factors with top reason being EGoM asking for complete analysis of various options that were presented before it on spectrum refarming.

EGoM was given three different options were put before Telecom Commission including refarming (or redistribution of airwaves held by existing players) of all airwaves held by incumbents, or allowing the operators to retain either 2.5 Mhz or 5 Mhz of airwaves frequencies in 900 Mhz band.

However, teh Telecom Commission in last meeting on October 17 had decided to refarm the entire spectrum.

The panel Chairman said the analysis was required in backdrop of representation made by the industry bodies and certain reference made by government departments including Economic Affairs Secretary Arvind Mayaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Chandrashekhar said clarifications from TRAI were required as recommendation with regard to the prescribed limit of spectrum, refarming, liberalisation of spectrum and auction had come in different points in time.