EGoM on Telecommunication recommended to reduce 2G Base Price

The empowered group of ministers (EGoM) on telecommunications, headed by union home minister P Chidambaram , recommended to reduce the base price for 2G spectrum airwaves by 4000 crore rupees. The EGoM recommended the base price for 2G spectrum at 14000-16000 crore rupees against 18000 crore rupees suggested by Telecom Regulatory Authority of India (TRAI).

The EGoM decision on spectrum price was taken during a meeting in Delhi on 20 July 2012. The EGoM announced a cut in spectrum usage charges (which will be part of the operators’ revenues towards spectrum fee) from 8-10 percent recommended by Trai to between 3 percent and 6 percent. The EGoM’s recommendations will now be sent to the Union Cabinet for its approval.

The EGoM also approved the department of telecommunications’ (DoT) suggestion to defer the mode of payment for auction winners. Giving in to demand of telecom operators the DoT had suggested the EGoM that the auction winners should be allowed to pay 25-30 percent of the spectrum fee upfront and rest amount divided in 10 equal installments annually.

The fresh 2G spectrum auctions were necessitated as Supreme Court 2 February 2012 scrapped 122 licenses of 9 telecom companies. The Apex Court in its verdict observed that 2G spectrum allocation held in January 2008 was crammed with irregularities thus should be scrapped. The court also instructed Union government to carry out a fresh 2G airwave auction. 2 June 2012 was set as the initial deadline for the auction, which was later extended to 31 August 2012 by the court.

The EGoM on telecommunication was reconstituted after Pranab Mukherjee, the head of the group, resigned as the Union Finance Minister in June 2012 to contest Presidential election. Subsequently the panel was reconstituted with Home Minister P Chidambaram as its head.The reconstituted panel includes Union Telecom and HRD Minister Kapil Sibal, Information and Broadcasting Minister Ambika Soni, Defence Minister AK Antony, Law Minister Salman Khurshid, and Minister of State in the Prime Minister's Office V. Narayanasamy as members. The panel held its first meeing on 12 July 2012 where it discussed the issues including reserve price, spectrum usage charges and terms of payment.