While the government has reason to appreciate the Telecom Regulatory Authority of India (TRAI) recommendations on pricing of 2G spectrum, as these will bring more money into its coffers, mobile operators, particularly old ones, have reason to worry, as they will have to pay hefty amounts for spectrum they are holding or have asked for (See: Telcos jittery as TRAI moots six-fold hike in spectrum prices).
This would not only hit the earnings of telecom companies, but may also force them to hike tariffs.
Reacting to the proposed six-fold hike for pan-India 2G spectrum, from Rs1,658 crore (2001 prices) to Rs10,972 crore (2010 prices) and Rs4,571 crore for an additional 1 MHz of pan-India spectrum, the Cellular Operators' Association of India (COAI), which represents GSM operators, called the recommendations ''disastrous''.
''The TRAI's recommendations are like changing the goal posts in the middle of the game. We cannot go among subscribers and recover it.
The assumptions used by TRAI are open to question … it has used very sophisticated mathematical modelling. It may take a couple of weeks for us to understand, but on the face of it, these look very disastrous for the industry,'' COAI director-general Rajan Mathews said.
Bharti Airtel said the TRAI recommendations went against the stated principle of the government to offer affordability, fairness and level-playing field. There seems to be huge inconsistency in terms of the differences of prices in various circles, it said.