The Telecom Regulatory Authority of India (TRAI) has defended its recent decision of cutting base price for 2G spectrum.

The telecom regulator said spectrum prices had been tested in the market twice, which showed the need of a reduction.

TRAI cut the base price for the 900 MHz band for the Delhi, Kolkata and Mumbai circles by 79 per cent to Rs 650 crore per MHz, from previously recommended base price of Rs 3074.18 crore per MHz. For the 1800 MHz band, the recommended base price was slashed by 60 per cent.

Defending its recent decision of price reduction, TRAI said, "This is a reality that needs to be factored into the current exercise. if the reserve price is set too high, it may dispel all bidders."

The regulator recommended the cuts in the base price for 2G spectrum after the government's telecom department suffered embarrassing failures in two attempts to sell the spectrum. In the second spectrum auction, only one telecom operator placed bid for a particular band of spectrum. The only bid that the telecom department received was after a 50 per cent reduction in base price.

TRAI also announced its decision of not reserving any spectrum for the existing players when their permits expire in 2014.

Akhil Gupta, managing director of Bharti Airtel, welcomed the telecom regulator's recommendations, but he also expressed his concerns over the lack of reservation of spectrum for the existing players.