TRAI says, 2G spectrum price hike won’t affect call rates

When TRAI declared a 13 times hike in the 2G spectrum pricing, everyone thought that the tariff would go high. TRAI says this is not the case and there would only be a maximum hike of 2 paisa per minute. Currently there are 14 telecom operators in India and the tariff ranges from 40 to 80 paisa per minute. So, this significant hike in spectrum pricing will not really affect the call rates. India has the cheapest call rates in the world.

Call tariff hike

TRAI also stated that the increase in price is just a small part of tariff, considering 15 percent of returns on the capital. TRAI also stated that operators whose license got cancelled will also have to pay Rs 3,622.18 crore for one unit spectrum. Rs 93,721 crore is the total cost of what telecom operators will be paying. Existing operator will have to pay the same price if they want extra spectrum.

Considering growth rates of companies, there would be a hike of 3.6 paisa per unit in the first year. Subsequently in next 20 years, the effect would get under 1 paisa. Also the tight competition between operators will help maintaining the call tariff. TRAI also pointed that this increase in price for spectrum would result in 1 paisa increase in tariff.

Mobile companies on the other hand disregarded these theoretical calculations. They also pointed out several other factors which TRAI did not consider. These factors include existing debt, permit renewal, low data usage and free voice calls.

Via: TimesOfIndia

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