The cost of auctions

The new recommendations from the Telecom Regulatory Authority of India, or Trai, on spectrum pricing have led to much public heartburn. Auction reserve prices, according to telecom operators and some observers, have been set inexplicably high, at Rs 3,622 crore per MHz for the 1800 MHz band and Rs 7,244 crore for the 900 MHz band. On worries that these would cause the business to become unviable, and phone tariffs will spike, telecom stocks have fallen for two days in a row.

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