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3G base price prohibitive: industry insiders

Abdullah Mamun
Private mobile operators urged the government to reconsider the $20 million base price for 2,100 megahertz spectrum auction to roll out 3G or 4G service, as it would affect users' affordability.
They also raised issues with the additional 15 percent value-added tax imposed over the spectrum price, unpredictable regulatory environment and existing laws that would discourage investors for the auction.
The absence of a VAT rebate will increase the operators' spending, and make 3G business less attractive, they said.
"The floor price is not based on the economic indicators and does not reflect the potential 3G uptake and revenue," said Michael Kuehner, CEO of Robi Axiata.
"The government should focus on endusers' benefit and affordability. But there are some 2G issues that should be resolved before entering into 3G bidding.”
Abubakar Siddique, telecom secretary-in-charge, said the ministry will initiate a meeting with the operators before finalising the 3G guideline.
There will be similar meeting with the ICT ministry and the regulator before finalising the guideline, he said.
Siddique said he needs 15-20 days more to complete the guideline. The secretary said the operators will have to pay VAT and will not get any rebate according to the amended finance bill of June lastyear.
“We believe swift rollout is required to make 3G accessible to as many customers as possible, and hence the operators could have focused on network rollout if the spectrum prices are kept low,” said Shihab Ahmad, senior director for marketing of Banglalink.
“We hope the government reconsiders the spectrum charges.”
Mehboob Chowdhury, CEO of Citycell said: “We are not surprised. But it could have been lower and providing broadband internet to the common people could have been more affordable.”
“We feel that the base price is still very high," said Tahmeed Azizul Haq, acting chief communication officer of Grameenphone.
"However, there are equally important issues like ensuring a predictable regulatory regime through stable licence terms and conditions, formulation of rules under the telecom law, and resolution of VAT needs to be addressed through proper consultation before finalising the 3G guideline.”
Earlier in an interview, Sanjay Kapoor, Bharti Airtel's chief executive officer for India and South Asia, said the proposed base price is prohibitive. “To draw such a high spectrum price is like killing the golden goose.”
He deemed the proposed base price to be high in comparison to the emerging markets, and suggested it be kept at the minimum level. He said high spectrum prices do not present a "strong business case".