Original URL: http://www.theregister.co.uk/2012/05/07/india_2g_auction_chaos/

Indian callers could see bills DOUBLE after spectrum auction chaos

Operators in dire warning as government mulls proposals

By Phil Muncaster

Posted in Networks, 7th May 2012 06:48 GMT

Mobile phone bills in India could double if the government agrees to new regulatory proposals for upcoming 2G spectrum auctions, the country’s major operators have warned.

The telecoms ministry is currently seeking clarification on some of the proposals from regulator the Telecom Regulatory Authority of India (TRAI), which recommended the new auction prices start at more than ten times the figure carriers paid in 2008.

The auctions have to take place before August according to a Supreme Court ruling which cancelled all the licenses doled out in 2008 after widespread corruption was uncovered.

The rival operators including Vodafone, Airtel and Telenor India have now banded together to lobby the government against TRAI’s plans.

Aside from demanding an 80 per cent cut in the proposed cost of licenses they are complaining about TRAI’s recommendation to only release a small chunk of the 1800 MHz band – just 5MHz – for auction in each service area of the country.

They also want the government to reject TRAI’s proposal forcing them to surrender the current 900MHz spectrum and switch to 1800MHz – plans which they say will lead to huge gaps in coverage, especially in rural areas.

In a press conference attended by Indian news service IANS at the end of last week, the operators ramped up the hyperbole.

“The TRAI recommendations are flawed and retrograde, regressive and uncertain, which will harm consumer interest, and will ring the death knell for the Indian telecom industry,” Airtel CEO Sanjay Kapoor is quoted as saying.

“If we were to surrender the 900 MHz spectrum and switch to 1800 MHz, you as customers will find dark holes inside and in streets and bylanes … We will need to put more towers for 1800 MHz, with more diesel, and this will impact the environment.”

Industry association the GSMA backed the operators, claiming the proposals seemed to be designed to squeeze money out of the industry for nothing but short-term gain.

It continued with the following strongly worded statement:

The proposals disregard international best practice in spectrum policy and jeopardise the investment of billions of US dollars in new mobile infrastructure in a sector that either directly, or indirectly, employs almost 10 million people and serves more than 911 million consumers. However, there are also signs that some of the operators’ dire warnings about how it will negatively impact investment and growth in the market may have been deliberately over-exaggerated.

The Times of India revealed that new Citigroup research estimates the increased auction prices would only force prices for the end user up by around 4 paise per minute, which is less than 10 per cent of the 50-60 paise per minute average call.

India has one of the fastest growing mobile phone markets in the world driven, like China’s, by a huge population and growing middle class.

However, most consumers are still using feature phones with limited 2G services.

IDC’s most recent Worldwide Quarterly Mobile Phone Tracker predicted that India would leapfrog the UK by 2016 to have the third biggest smartphone market in the world. ®