With the base price of 2G spectrum auction getting super costly, it is a strong possibility that operators will increase the call tariffs by 3 paise per minute to cover their own money which they will spend on the 2G spectrum auction. According to report by the Hindustan Times, the Telecom Regulatory Authority of India (TRAI) proposed a reserve price of Rs 3,622 crore per MHz against the Rs 375 crore per MHz price that the existing operators paid. And if the government accepts this recommendation then the operators may have to pay about Rs 700,000 crore in the next 10-15 years to the government for the existing and future spectrum.
A few officials have also pointed out that the prices may go up further if the new operators decided to stay away from the auction process and would result in less competition in the market. He said the factors that might discourage the new players are market uncertainty and high spectrum prices. Please note that tariffs did come down significantly from Rs 1 to 50 paise per minute when the new carriers launched their services.
Though new players believe that less competition would result in huge increment in call tariffs but TRAI has an entire different perspective about this situation. The authority believes that “the cost of spectrum as percentage of total service cost is very low. Hence, it will not have much impact on tariff,” said JS Sarma, chairman of TRAI.