'TRAI plan on spectrum auction will curtail investment'

New Delhi, April 27 (IANS) Recommendations of the telcom regulator on spectrum auction would drive up the cost of airwaves, create an artificial scarcity and affect investor sentiments in the sector, global GSM operators lobby GSMA said Friday.

"TRAI (Telecom Regulatory Authority of India) recommendations would not only drive up the cost of the mobile spectrum, but would also create artificial scarcity of this critical resource," GSMA said in a statement.

"The 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," it added.

The regulator has recommended to the government a higher-than-expected base price for the auction of 2G spectrum. It has recommended the reserve price for the 1800 MHz spectrum at Rs.3,622 crore and that for 900 MHz at Rs.7,244 crore.

It has also said that the auction would be open to all the players, including the incumbents and the new players, only those firms which are holding spectrum beyond the prescribed cap should not be allowed.

GSMA has also said that the recommendation will not serve the interests of the broader Indian economy.

"Given the strong correlation between mobile penetration and socio-economic development -- with a 10 percent increase in mobile broadband penetration delivering as much as $80 billion (Rs.3,506 billion) of extra revenue for India's transport, healthcare and education sectors by 2015 -- the TRAI's recommendations will not serve the interests of the broader Indian economy."

According to GSMA, the proposals disregard international best practice in spectrum policy and jeopardize the investment of billions of dollars in new mobile infrastructure in a sector that employs almost 10 million people and serves more than 911 million consumers.