In my recommendation to the TRAI in Jan-2012 I had recommended that the Telecom Spectrum Auction be conducted under the Direct supervision of the Honorable Prime Minister of India as the DoT and Ministry of Communications is filled with Bureaucrats & Politicians full of own agendas while deciding the fate of Telecommunications in this country.
As per recent media reports, DoT has rejected most of the TRAI recommendations on 1800Mhz / 900Mhz Spectrum Auction as we had already anticipated that Mukesh Ambani was not a very happy man. DOT’s internal panel has raised objections on the following – 1] the bottom-up spectrum valuation approach and methodology, 2] the steep reserve-price cuts suggested, 3] simpler SUC charge regime (the DOT panel has cited ‘practical’ inability to simplify the SUC regime), [We were certain that this will be rejected to please Mukesh Ambani] and 4] no auctions for the 800 MHz band spectrum – the DOT panel wants this to be auctioned as well. DoT arrogantly refused to lay a Roadmap which is so essential to let operators and other stakeholders decide on the billions of dollars of CAPEX investments.
Spectrum valuation is an incredibly challenging exercise and the right approach is to give due weight to the latest
signals from market participants. The DoT needs to move out of the shadows of frenzied 3G (2100 MHz) spectrum bidding of the year 2010. What the TRAI had suggested were reserve prices for the next round of auctions; if the true market value is indeed higher, then a well conducted auction would take it higher.
After the DoT’s arrogant rejection, eGoM have been quiet but the Finance minister has sent feelers that the Auction will go forward since he is already making provisions in his accounts based on the same. The final decision within DOT will be taken by the Telecom Commission and we could have a round or two of communication between the TRAI and the DOT before that happens, and more important, a high reserve price can indeed be set; however, the DOT cannot force compulsory participation on the industry. A High Reserve Price will mean cycles of Auction failure and Piling Litigations by incumbents against the Government.