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This story is from November 29, 2006
Wrong number
The TRAI's recommendations on 3G spectrum have raised everybody's hackles.
The Telecom Regulatory Authority of India's (TRAI) recommendations on 3G spectrum have raised everybody's hackles. The common refrain is that the Rs 1,050 crore that would be required for a pan-India license is too high.
Industry majors have protested saying it would raise the cost of service for the common man. This is an old trick: When in a corner, invoke the common man.
Remember Ram Vilas Paswan preparing the groundwork for turning limited mobility CDMA phones into full mobility? He called it the common man's mobile and the rest, as they say, is history.
It is important to expose the games played in the pricing process. A look at the data and its simple analysis reveals the pattern.
Compared to the Rs 1050 crore pan-India fee, for the cream of the nation, Rs 640 crore does not seem extraordinary at all.
Compare this with the amount that was paid by operators for the GSM spectrum for these circles eight years ago. For 4.4 Mhz of spectrum made available for these circles, the entry fee was Rs 203.66 crore for Mumbai, Rs 170.7 crore for Delhi, Rs 206.83 crore for Karnataka, Rs 189 crore for Maharashtra, Rs 154 crore for Chennai, Rs 78.01 crore for Kolkata, and so on.
A total of almost Rs 1,300 crore was received from GSM operators of the top nine circles for spectrum.
If one were to go by that rate, then the present value of 5 Mhz spectrum should have been Rs 1,470 crore. Why has it now been pegged at Rs 640 crore now? Add a category B, but lucrative, Punjab circle to the gig and it seems even more warped— 4.4 Mhz of the circle was handed over to the GSM operators for Rs 151.75 crore, and at that rate, the 5 Mhz should have gone for Rs 172 crore, but the recommendation is for a mere Rs 40 crore.
From what angle is the spectrum allocation fee high, one fails to understand. For the other category B circles such as Rajasthan, UP (E) and UP (W), Kerala, Madhya Pradesh and Haryana, the fee payable for the 4.4 Mhz of GSM was Rs 188 crore, and should now have been Rs 213 crore.
It has now been pegged at Rs 240 crore. Not much difference.As for Assam, Bihar, Himachal Pradesh, Jammu & Kashmir, Orissa, the seven sisters (category C circles) and the remaining category B circle, West Bengal, a whopping Rs 130 crore has been sought.
First time round, a paltry Rs 26 crore was received as license fee for the GSM spectrum, and at that rate, the current rate should have been Rs 30 crore.
What is the story? Make it cheap for circles where majors want to concentrate, and more importantly, keep the unwanted sectors artificially high so that none can get in.
Remember the last time it happened. The rates were kept high for the least sought sectors only to be reduced progressively under the alibi that else none would come in. History wants to repeat itself, don't we all know?
The regulator may have come up with the recommendations in good faith to try and rationalise the structure. However, it cannot overlook the history of how things have happened.
If people paid high for the GSM spectrum first time round, when the real growth story was an unknown, now, when everyone knows it's the fastest growing mobile market in the world, those interested in getting the circles of choice would have shelled out anything demanded.
The government should fine-tune TRAI's recommendations. There is an urgent need to enhance the fee for lucrative areas and make it reasonable for areas which fail to attract operators.
The policy should ensure at all consumers benefit from technological progress, and not safeguard some corporate interests.
Industry majors have protested saying it would raise the cost of service for the common man. This is an old trick: When in a corner, invoke the common man.
Remember Ram Vilas Paswan preparing the groundwork for turning limited mobility CDMA phones into full mobility? He called it the common man's mobile and the rest, as they say, is history.
It is important to expose the games played in the pricing process. A look at the data and its simple analysis reveals the pattern.
For the most important category A circles of Delhi, Mumbai, Karnataka, Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu, Chennai, and Kolkata, the regulator has recommended an entry fee of Rs 80 crore each for all except the last two, for which it is Rs 40 crore each. Therefore a total of Rs 640 crore is being sought from the nine category A circles.
Compared to the Rs 1050 crore pan-India fee, for the cream of the nation, Rs 640 crore does not seem extraordinary at all.
Compare this with the amount that was paid by operators for the GSM spectrum for these circles eight years ago. For 4.4 Mhz of spectrum made available for these circles, the entry fee was Rs 203.66 crore for Mumbai, Rs 170.7 crore for Delhi, Rs 206.83 crore for Karnataka, Rs 189 crore for Maharashtra, Rs 154 crore for Chennai, Rs 78.01 crore for Kolkata, and so on.
A total of almost Rs 1,300 crore was received from GSM operators of the top nine circles for spectrum.
If one were to go by that rate, then the present value of 5 Mhz spectrum should have been Rs 1,470 crore. Why has it now been pegged at Rs 640 crore now? Add a category B, but lucrative, Punjab circle to the gig and it seems even more warped— 4.4 Mhz of the circle was handed over to the GSM operators for Rs 151.75 crore, and at that rate, the 5 Mhz should have gone for Rs 172 crore, but the recommendation is for a mere Rs 40 crore.
From what angle is the spectrum allocation fee high, one fails to understand. For the other category B circles such as Rajasthan, UP (E) and UP (W), Kerala, Madhya Pradesh and Haryana, the fee payable for the 4.4 Mhz of GSM was Rs 188 crore, and should now have been Rs 213 crore.
It has now been pegged at Rs 240 crore. Not much difference.As for Assam, Bihar, Himachal Pradesh, Jammu & Kashmir, Orissa, the seven sisters (category C circles) and the remaining category B circle, West Bengal, a whopping Rs 130 crore has been sought.
First time round, a paltry Rs 26 crore was received as license fee for the GSM spectrum, and at that rate, the current rate should have been Rs 30 crore.
What is the story? Make it cheap for circles where majors want to concentrate, and more importantly, keep the unwanted sectors artificially high so that none can get in.
Remember the last time it happened. The rates were kept high for the least sought sectors only to be reduced progressively under the alibi that else none would come in. History wants to repeat itself, don't we all know?
The regulator may have come up with the recommendations in good faith to try and rationalise the structure. However, it cannot overlook the history of how things have happened.
If people paid high for the GSM spectrum first time round, when the real growth story was an unknown, now, when everyone knows it's the fastest growing mobile market in the world, those interested in getting the circles of choice would have shelled out anything demanded.
The government should fine-tune TRAI's recommendations. There is an urgent need to enhance the fee for lucrative areas and make it reasonable for areas which fail to attract operators.
The policy should ensure at all consumers benefit from technological progress, and not safeguard some corporate interests.
End of Article
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