5G Spectrum Pricing: Against National Interest

The decision by the Telecom Regulatory Authority of India to stick to its stand on pricing 5G spectrum does not augur well for the debt-laden telecom sector and, more importantly, for the propagation of affordable data services in the country. In August, the regulator had set a base price of Rs. 492 crore per megahertz for the 3,300-3,600 MHz band, which has been earmarked for 5G services. Since every operator requires at least 100 MHz of spectrum to offer 5G, an operator will have to cough up Rs. 49,200 crore for spectrum alone. Such a payout would put more burden on the telecom sector given that the operators are already reeling under a debt of over Rs. 4 lakh crore.

The Department of Telecom had acknowledged the financial constraints faced by the industry while asking TRAI to review the reserve price. The DoT reminded the regulator that the goal of National Digital Communication Policy 2018 includes achieving digital empowerment and improved well-being of the people of the country, and one of the objectives of NDCP is to provide broadband for all. Thus, pricing of spectrum should facilitate inclusive and affordable 5G services. The DoT had also said that the demand for spectrum is likely to be subdued due to consolidation in the market with just three players remaining and, therefore, the objective should be to sell the entire spectrum which is put for auction rather than having a situation where a large quantum of spectrum remains unsold. It was clear from the DoT’s note to TRAI that the policymakers did not want a repeat of the previous auction when it did not get a single bid for the 700 MHz band due to the high reserve price. It is surprising that TRAI has chosen to ignore these cues and has declined to reduce the reserve price. The regulator’s stand is flawed as it does not take into account various factors including the declining revenue generated by the industry and the operators’ capacity to pay.

It will be a huge setback for Prime Minister Narendra Modi’s Digital India vision if the operators decline to bid for 5G spectrum because of the flawed pricing. India cannot afford to have another failed auction just when data consumption in the country is growing exponentially. 5G will enable the delivery of critical services such as tele-surgery and Internet of Things over a mobile network with unprecedented efficiency, in addition to opening the floodgates for innovative applications that require a massive amount of high-speed bandwidth. The biggest benefit for millions of mobile users in a country like India, where call drops and poor data connectivity have become the norm, is that 5G promises to make wireless networks close to what wireline broadband networks offers — uninterrupted service and unlimited bandwidth. Indian consumers cannot be robbed of these services. The DoT should ignore the TRAI’s pricing and should set a reserve price that is more in sync with national objectives.―The Hindu Business Line