The GSM Association has openly blasted the recommended plan from Indian telecoms regulator TRAI to re-auction 2G spectrum at premium prices, saying the spectrum proposal threatens mobile broadband deployments and investments in the country.
“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,” the mobile operator industry group said in a public statement Friday.
TRAI recommended last week that the 2G spectrum freed up from the cancellation of 122 licenses be given a base price of 36.22 billion rupees (€520 million) per MHz – more than 13 times the base price at which the spectrum was originally licensed. TRAI said the recommendations – which would also apply for future license renewals and the refarming of 900-MHz spectrum – could net the government as much as 70 trillion rupees.
However, GSMA chairman Franco Bernabè, who is also chairman and CEO of Telecom Italia Group, compared TRAI’s auction plan to Europe’s 3G spectrum auctions over a decade ago, which has been long been criticized as a cash-generating exercise by government regulators who set their base prices far too high.
“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,” Bernabè said.
The GSMA said that TRAI’s recommendations would not only drive up spectrum costs – which would discourage mobile investment mobile broadband infrastructure – but also create “artificial scarcity” by forcing current 900 MHz licensees out of the band into the 1800 MHz band.
“As a result, TRAI would limit the available spectrum in the upcoming 1800 MHz 2G auction and leave the remainder under-utilized for a significant period, creating unnecessary scarcity at a time when India has an opportunity to shape the future of the mobile industry,” the statement said. “This effectively means that billions of US dollars of investment would be wasted.”
GSMA Director General Anne Bouverot added that the spectrum plan would impact the Indian economy, citing a previous study from the GSMA and Analysys Mason claiming that a 10% increase in mobile broadband penetration could generate as much as $80 billion (€60.3 billion) of extra revenue for India’s transport, healthcare and education sectors by 2015.
“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,” she said.
Bouverot also sent a letter directly to Telecom Minister Kapil Sibal expressing the group’s concerns, according to the Economic Times.