Telecom Regulatory Authority of India (TRAI) has today announced its Recommendation on Auction of Spectrum proposing a base price of Rs. 3622.18 crores for the All India 2G Spectrum in 1800 Mhz which is higher than the base price set for the 3G Auctions in 2010. Where as the spectrum in 900 Spectrum shall cost an upward of Rs. 7244.36 crores as per these recommendation. This steep hike in the base price is a big blow to the operators whose licenses were cancelled in February this year and to the existing operators as well.

For the new entrants or license cancelled operators waiting 2G auctions, it would mean more outlay which is for sure drive the tariffs north. We might not be able to enjoy calls at 50p in the near future. As for the incumbents, this would affect them when they would come renewing their license which is starting 2014. One thing is for sure, the consumers would suffer at the end.

Reserve Price per MHz (in Rs. Crore)
S .No.	Licence Service Area	700 MHz	800 MHz	900 MHz	1800 MHz	2100 MHz	2300 MHz
1	Delhi	2869.04	1434.52	1434.52	717.26	747.17	126.2
2	Mumbai	2808.56	1404.28	1404.28	702.14	731.43	129.13
3	Kolkata	470.76	235.38	235.38	117.69	122.6	29.46
4	Maharashtra	1087.96	543.98	543.98	271.99	283.34	51.56
5	Gujarat	930.76	465.38	465.38	232.69	242.39	34.57
6	AP	1187.72	593.86	593.86	296.93	309.31	59.64
7	Karnataka	1366.56	683.28	683.28	341.64	355.89	86.91
8	Tamil Nadu	1267.12	633.56	633.56	316.78	329.99	116.54
9	Kerala	270.32	135.16	135.16	67.58	70.39	14.57
10	Punjab	278.52	139.26	139.26	69.63	72.54	18.71
11	Haryana	192.56	96.28	96.28	48.14	50.14	6.75
12	UP – West	444.64	222.32	222.32	111.16	115.79	10.35
13	UP – East	315.32	157.66	157.66	78.83	82.12	8.02
14	Rajasthan	277.68	138.84	138.84	69.42	72.32	5.48
15	M.P.	223.48	111.74	111.74	55.87	58.2	7.02
16	West Bengal	106.96	53.48	53.48	26.74	27.85	4
17	H.P.	32.2	16.1	16.1	8.05	8.39	1.16
18	Bihar	175.96	87.98	87.98	43.99	45.83	5.59
19	Orissa	83.92	41.96	41.96	20.98	21.85	3.58
20	Assam	35.88	17.94	17.94	8.97	9.34	1.86
21	North East	36.6	18.3	18.3	9.15	9.53	1.2
22	J&K	26.2	13.1	13.1	6.55	6.83	1.2
	Total	14488.72	7244.36	7244.36	3622.18	3773.24	723.5

As far as spectrum for the 700 Mhz is concerned, TRAI recommended that it is not the right time for its auctions as the LTE ecosystem is not yet fully developed. It also recommended to wait till 2014 to realise the full market value of the 700 Mhz spectrum.

With regards to the Auction Structure, TRAI recommended that spectrum shall be conducted using Simultaneous Multiple Round Auction (SMRA) format (just like 3G). Simultaneous multiple-round auction is one where every license is up for bidding at the same time. Participants may bid on multiple licenses at once. All licenses will continue to be for sale until there are none left or there are no buyers.

Further, it recommended that Spectrum shall be offered in blocks of 1.25 MHz each and Every auction shall be open to all those holding CMTS licence/ UAS licence / Unified licence or eligible for grant of Unified Licence. Auction shall not be open to those that hold spectrum above the prescribed cap. The Authority further recommended deferred payment of the bid amount by the successful bidders which is as follows:

Spectrum	Initial Payment	Moratorium	Period for balance payment
Supra-1 GHz (1800,2100 and 2300 MHz bands)	33% of the Bid amount	2 years	10 years (equal annual instalments)
Sub-1 GHz bands (700,800 and 900 MHz bands)	25% of the Bid amount	2 years	10 years (equal annual instalments)