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Telecom spectrum auction ends; government to get Rs 1.1 lakh crore

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By newsgram Staff Writer

In the latest telecom spectrum auction, government has raised a record Rs 1.10 lakh crore ($17.6 billion) from the sale of mobile phone airwaves, said Telecom Minister Ravi Shankar Prasad on Wednesday.

Government has received bids worth almost Rs 1.10 lakh crore ($17.6 billion), topping the Rs 1.06 lakh crore it raised in 2010 said Prasad.

Spectrum revenue is the key for government to plug its fiscal deficit. A quarter to a third of winning price needs to be paid initially by victorious bidders and rest by 2027.

Major chunks of the 20 years licenses on offer are expected to be bought by top operators of the country – Bharti Airtel Ltd, Vodafone Group Plc’s India unit and Idea Cellular Ltd, though government hasn’t disclosed winning bidder and region in which they had won spectrum.

In India’s mobile phone market bidding underscores the fierce competition and the operators’ big bet on the potential for mobile data in the world’s fastest growing smartphone market.

Reliance Industries is expected to spend big on airwaves as it looks to roll out pan-India 4G services, five years after buying its licensee .

 

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Fresh Telecom War between Reliance Jio and Older Operators, Airtel and Vodafone-Idea

One of our competitors has imposed a rate of 6 paise for all off net calls made to other operators to cover the termination charge

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Telecom, War, Reliance
Telecom Regulatory Authority of India (Trai) Chairman R.S. Sharma did not respond to calls for queries on Jio' s contention that it has been forced to take the step due regulatory undertainty created by Trai issuing a consultation paper to review whether the regime timeline needs. Flickr

A fresh telecom war between Reliance Jio and older operators — Airtel and Vodafone-Idea — erupted on Wednesday after the Mukesh Ambani-led Jio said it would charge 6 paise per minute for making calls to other networks, even as Airtel described it as pressure tactics by Jio to reduce interconnection charges.

On account of taking a hit of Rs 13,500 crore due to network connection charges, or interconnet usage charges (IUC), Reliance Jio on Wednesday said it will charge customers 6 paise per minute for voice calls made to rival networks till IUC charges are eliminated. This is the first time that Jio users will pay for voice calls which has been free so far since September 2016.

Telecom Regulatory Authority of India (Trai) Chairman R.S. Sharma did not respond to calls for queries on Jio’ s contention that it has been forced to take the step due regulatory undertainty created by Trai issuing a consultation paper to review whether the regime timeline needs to be extended.

In a statement here, Airtel said: “One of our competitors has imposed a rate of 6 paise for all off net calls made to other operators to cover the termination charge of Interconnect Usage Charge (IUC). They have gone on to suggest that Trai has re-opened this issue”.

Telecom, War, Reliance
On account of taking a hit of Rs 13,500 crore due to network connection charges, or interconnet usage charges (IUC), Reliance Jio on Wednesday said it will charge customers 6 paise per minute for voice calls made to rival networks till IUC charges are eliminated. Flickr

“On 19th September, 2017, when Trai reduced the IUC from 14 paise to 6 paise and proposed a move towards Bill and Keep (zero IUC) with effect from January 1, 2020, they had specifically mentioned that the Authority shall keep a close watch on developments in the sector, particularly with respect to the adoption of new technologies and their impact on termination cost.

“The Authority, if deems it necessary may revisit the scheme of Termination charge applicable on Wireless-to-Wireless calls after one year from the implementation of the regulation”, the statement said.

Trai had, in 2017, slashed the IUC to 6 paise per minute from 14 paise, and had said that the regime would end by January 2020. Last month, however, Trai weighed the option of deferring the date for scrapping IUC.

The regulator a floated a fresh consultation paper to see if there is a need to revise the applicable date for scrapping the IUC, given the continuing imbalance in inter-operator traffic.

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The paper also sought to discuss with stakeholders what parameters should be considered to decide on an alternate date, if any. At the time Trai decided to scrap the IUC, Airtel, Vodafone and Idea had resisted the change, while Jio was in favour.

Jio said that the possible change of timeline for eliminating IUC, has led to uncetainity about the IUC phase-out deadline and it cannot continue to be at a loss of Rs 13,500 crore on acocunt of IUC by offering free voice calls to rivals’ networks from its own.

“The consultation paper has created regulatory uncertainty and therefore Jio has been compelled, most reluctantly and unavoidably, to recover this regulatory charge of 6 paise per minute for all off-net mobile voice calls so long as IUC charges exist,” the Jio statement said.

Trai’s aim was to evaluate two factors – the adoption of VoLTE, which TRAI assumed would bring the cost down and that the growth of smaller-sized operators would result in symmetry of traffic would ensue. Both these factors have not materialised.

Telecom, War, Reliance
This is the first time that Jio users will pay for voice calls which has been free so far since September 2016. Pixabay

There are still over 400 million 2G customers from the poorest sections of society living in rural areas paying less than Rs 50 per month who still cannot afford to buy a 4G device. Second, there is still significant asymmetry of traffic.

Accordingly, Trai issued a consultation paper in September 2019 to reassess the timeline of the shift from 6 paise to a zero charge.

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The telecom industry is in a state of deep financial stress since the last three years with several operators having gone bankrupt and thousands of jobs lost. Given the massive 2G customer base in India the cost of the call at 6 paise is already significantly below the real cost of the call. (IANS)