Telephone tariffs will go up 100 per cent hitting customers hard if the government accepts the sector regulator's proposals on spectrum auction, service providers warned on Thursday.
"Our belief is that the implication could be as high as 100 per cent of the existing rates to be compensated by the customers. This would vary circle to circle and doesn't take into account any spectrum re-farming, which would actually push prices even further," said Sanjay Kapoor, Airtel chief executive officer.
Briefing the media a day after their bosses met key ministers and top officials to argue their case against the regulator's proposals, operational heads of the companies termed the recommendations as flawed and retrograde.
"The TRAI (Telecom Regulatory Authority of India) recommendations are flawed and retrograde, regressive and uncertain, which will harm consumer interest, and will ring the death knell for the Indian telecom industry," Kapoor said.
Present also at the news conference called by the Cellular Operators Association of India (COAI) were Himanshu Kapania, managing director of Idea Cellular, Rajiv Bawa, chief representative officer, Telenor India, Arvind Bali, Videocon director and CEO, and Vodafone managing director Marten Pieters.
On the proposed re-farming, Kapoor said: "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. The rural part of the country will seem disconnected tomorrow."
He also said the move could cost the industry thousands of crore and affect the environment. "We will need to put more towers for 1800 MHz, with more diesel, and this will impact the environment."
The operators sought a drastic reduction in the reserve price of spectrum, rejection of recommendation on re-farming, auction all spectrum available and do away with rollout obligations for auctioned spectrum from the government.
They also said that an artificial scarcity of spectrum was being created by auctioning only a limited amount of spectrum is being auctioned which will push up the auction prices.
Pieters of Vodafone said the operators were struggling for spectrum and it was in the interest of the industry to bring all the spectrum into play. "Every day you don't use it, you lose out."
"We need more spectrum. The average spectrum here is 6.4 Mhz, while everywhere else, you have 22 MHz."
On the proposed high spectrum reserve price, Kapoor said: "Any business case for a new technology has to be seen in a longer period of time but there are business cases which don't make sense in a 20-year horizon. And this is one of them."
Asked about differences among the firms, Bawa of Telenor said: "We compete in the market and fight all the time, and we will continue to have differences, but today we are here because we have a common cause, and there are things that are not good for a new player, and not good for an incumbent."
"The premise is the supreme court order, which say that licenses are quashed, and fresh licenses need to be given through an auction. At the most, one new player will be able to come in at these prices. This will impact tariffs, the roll-out obligations will impact, on top of this," he added.
Telenor's had urged the government to invite only new players for the auction.
Kapoor also said that the recommendations if accepted would badly affect the government's plan of extending low cost telephony in rural and remote areas of the country.
TRAI has recommended, among other proposals, a reserve price of Rs.3,622 crore for 1 MHz pan-India spectrum, which is around 10 times higher than the price at which 2G licences were allocated in 2008 under former Telecom Minister A. Raja.