Angry mobile operators have slammed the telecom regulator's recommendations on auction of spectrum and have said they would be forced to shut shop if these are accepted but independent estimates show that the impact on tariff would be marginal - small enough for the operators to bear the costs.

A Citigroup research note, released last week, estimates that the cost burden on consumers is likely to be 4 paise per minute, less than 10% of the current calling rates of 50-60 paise a minute. It says that operators are unlikely to give up spectrum and will try and keep their current allocation and the two options available to them is to pass the additional costs through with a small tariff hike or absorb it.

The country's top telecom operators such as Bharti Airtel , Vodafone and Idea on Thursday said mobile tariffs could nearly double in the metros and large circles if Trai's recommendations on spectrum auction and allocation are accepted in their current form.

The Citigroup estimates on tariff impact are quite similar to the Trai's own assessment . Although the government has sought clarifications , the regulator is sticking to its position with sources saying the recommendations were finalized after a thorough check of the numbers based on the experiences so far with regard to 2G and 3G auctions. Sources say all the stake-holders , including key players, were consulted before the recommendations were unveiled. " The effort has been made to ensure that fair value of spectrum is realised and at the same time care was taken to ensure that these proposals do not hurt the industry ," said a source.

The COAI has also said that operators would have to shell out high costs if Trai's proposal for 'refarming' of spectrum is approved. The regulator has recommended that operators with spectrum in the 900 MHz band get airwaves in the 1800 MHz segment if they lose out in the auction for the existing 900 MHz spectrum when the tenure of their 20-year licences ends. Telecom companies say this will require them to spend on their infrastructure. But sources say the spending on new infrastructure would not be huge and few adjustments would be needed to ensure that the shift does not impact services.

"In any case, the auction will take place 18 months before the end of the licence. If they win in the auction, they can keep the 900 MHz spectrum . If not, they will get 1800 MHz spectrum in lieu of the 900 MHz and the difference in price between the two will more than offset any infrastructure costs," an official source said.

The source also pointed out that the price realized for spectrum had risen from Rs 266 crore per MHz in 2001 to Rs 16,751 crore for 5 MHz by the time of the 3G auction in 2010. Considering that the exponential growth of the telecom sector in the last few years, the current reserve price is not totally out of tune with this trend, the source said.

CROSS-CONNECTION

GSM PLAYERS SAY

Mobile tariffs could nearly double in metros and large circles if the regulator's plan on spectrum auction and allocation are accepted

Trai has gone beyond the mandate given by SC

Operators to bear high costs on equipment if they shift to 1800 MHz; service quality to suffer

TRAI SAYS

Recommendations to have marginal impact on tariffs, possibly around 4 paise per min

Spectrum liberalisation assures better rural and inbuilding coverage, faster rollout of mobile broadband and more choice for consumers

Refarmed spectrum enables introduction of new technologies, yielding economic and social benefits

Recommendations based on feedback, consultations with all stakeholders

900 Mhz spectrum would be up for auction when it is refarmed (Economic times)