Telecom commission wants more airwave slots in auction

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India's Telecom Commission wants a higher number of slots to be auctioned in an upcoming sale of second generation (2G) radio airwaves than that proposed by the sector regulator, in what could provide some respite to carriers protesting regulatory recommendations.

The commission wants at least 10 mega hertz (MHz) of airwaves to be auctioned in each telecom zone, Telecoms secretary R. Chandrashekhar said, higher than 5 MHz suggested by the sector regulator.

The commission is yet to take a decision on the auction base price and will meet again on Saturday, said Chandrashekhar, the top bureaucrat in the telecoms ministry, who also chairs the Telecom Commission that is the highest decision-making body within the ministry.

In case of the upcoming auction, a panel of ministers has the final say on pricing and other rules.

India will sell 2G radio airwaves for the first time through an auction to redistribute them among carriers.

The auction, due by August, follows a Supreme Court order to revoke a total 122 zonal telecom permits awarded to eight carriers in a scandal-tainted 2008 state grant process.

The Telecom Regulatory Authority of India (TRAI) had last month suggested an auction starting price that is nearly 10 times what carriers had paid in a 2008 state grant process and also proposed limited number of slots in the auction.

The regulator's proposal for a limited number of slots risks driving up bid prices, as was the case in an auction of 3G airwaves in 2010.

The regulator this month reaffirmed most of its proposed rules, which mobile carriers have slammed.

The auction will be the last chance for international carriers including Norway's Telenor and Russia's Sistema, as well as fourth-biggest Indian carrier Idea Cellular to win back their permits that are set to be revoked after the court order.

Telenor and Sistema have threatened that they will pull out of India if the government goes ahead with the regulator's proposals.

The proposals have also drawn protests from market leaders Bharti Airtel and Vodafone's local unit, which are not affected by the court order but were looking to buy more airwaves in the auction to feed their overstretched networks.

The companies are also fighting another regulatory proposal to refarm, or switch, their superior-quality airwaves with a relatively-inferior band before their permits are renewed starting in 2014.

Carriers say the proposals, if implemented, will add billions of dollars to their costs, hurting profits, and will force them to increase tariffs.

India is the world's second-biggest mobile phone market with more than 900 million customers. But carriers operate under wafer-thin margins as a fiercely-competitive market has forced them to offer one of the world's cheapest call prices.

The industry's profit margins have been falling for the past several years amid competition and also due to a steep increase in debt especially after a $19 billion payout for buying 3G and 4G airwaves in a 2010 state auction.

On Thursday, Chandrashekhar, said the Telecom Commission had agreed that all airwaves assigned to companies in the future would be 'liberalised'.