Following criticism that the opening bids for 2G spectrum licences were too high, the Indian authorities have lowered the starting prices. However, the GSMA has stated that it still believes the prices to be prohibitively high.
The initial prices proposed by the Indian regulator TRAI (Telecom Regulatory Authority of India) would have seen the bidding for a new licence start at INR36.22 billion/MHz, meaning that a nationwide 5MHz licence would have cost INR180 billion (US$3.2 billion).
The prices have been revised upon the recommendation of the Empowered Group of Ministers (EGoM), a government body that has proposed a starting price of INR140 billion to INR160 billion (US$2.5 billion to US$2.9 billion) for a nationwide licence.
Anne Bouverot, the GSMA Director General, stated: “We remain concerned that over the long term it will hamper the delivery of high quality, affordable and innovative mobile services across the country. Alongside our member operators, we urge the [Indian authorities] to adhere to international best practice when taking a final decision, to bring the greatest benefits to India's economy, society and its people."
While operators are permitted to pay for their licences in instalments, they are still obliged to pay usage charges on their spectrum, which is typically 3 – 8% of the licence fee. The initial payment for GSM licences is 35%, while CDMA operators need only pay 25% upfront.
With auctions due to begin on the 31st of August, the Indian authorities have until this deadline to approve the EGoM’s proposals.