Bangalore April 27 , 2012: The body representing GSM mobile operators worldwide is the latest to pan the steep 10-fold hike in the asking price for 2Gspectrum mooted by India's government-appointed telecom regulator.The GSM Association says the Telecom Regulatory Authority of India's proposals will "set India back in its goal to deliver 'Broadband on Demand' to the citizens of India", adding: "The proposals disregard international best practice in spectrum policy and jeopardize 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".
TRAI had proposed Rs 36.22 billion for every megahertz of nationaal spectrum, compared to Rs 3.8 billion sought in 2008. International partners of Indian operators will be particularly hard hit if the TRAI suggestions are accepted by government -- Russian Systema announced a loss of $ 700million because of its India operations while the Norwegian Telenor says it may quit its India operation.
GSMA cites the European experience more than a decade ago which proved that auctions designed to maximise revenue, hinders the development of the mobile sector and the socio-economic benefits that mobile delivers to the public. Reducing the ability of mobile operators to invest in network upgrades and expansion would undermine the ability of India to leverage its telecom infrastructure to empower citizens and businesses, especially those in rural communities, to participate equitably in the Internet economy. For example, says GSMA, the TRAI’s proposed reserve prices for upcoming spectrum auctions are so prohibitively high that they will inevitably curtail mobile operator investment in Mobile Broadband infrastructure and increase prices to consumers.
“Efforts to squeeze money out of mobile operators for some perceived short-term gain will only reduce investment in networks, inhibit growth of mobile services and drive up consumer prices – limiting the value the public will derive from the spectrum resource in the long term,” said Franco Bernabè, Chairman of the GSMA and Chairman and CEO of Telecom Italia Group.
Earlier this month, the GSMA announced that India was positioned to surpass the US as the second largest Mobile Broadband market in the world within the next four years.
Anne Bouverot, Director General, GSMA, says, “The GSMA’s member operators in India have invested heavily and worked hard to deliver innovative services to consumers and positively impact the broader Indian economy. They are naturally very concerned about the TRAI recommendations, which have the potential to stifle investment in India’s mobile sector. The GSMA and its members are seeking an open dialogue with the Government of India on the licensing of the critical spectrum with the aim of finding a solution that will drive investment and growth in mobile communications and more broadly in the Indian economy.”
Related stories in Indian media: Telecom set to be cash cow for government http://timesofindia.indiatimes.com/business/india-business/Telecom-set-to-be-cash-cow-for-government/pmarticleshow/12862536.cms?prtpage=1
TRAI's costly 2G auction proposal draws operator ire http://in.reuters.com/article/2012/04/23/trai-2g-spectrum-auction-licence-price-idINDEE83M0AZ20120423
‘Telecom companies have got used to good things in life’ http://www.dnaindia.com/print710.php?cid=1681190
Telenor may quit India after TRAI suggests hike in 2G spectrum fee http://articles.economictimes.indiatimes.com/2012-04-24/news/31392581_1_telenor-shares-spectrum-scam-2g
Sistema swings to Q4 loss on $700-mn India hit http://www.business-standard.com/india/news/sistema-swings-to-q4-loss700-mn-india-hit/472755/