In Relief To Telcos, TRAI Told To Review Reserve Price For  5G Spectrum

The government has sought a comprehensive review of the telecom regulator’s recommendations on upcoming spectrum auctions, including reserve prices, in a relief for debt-ridden telcos clamouring for lower prices.

The department of telecommunications (DoT) made the request to the Telecom Regulatory Authority of India (Trai) to ensure competition, sale of all spectrum and bringing the benefits of 5G to social sectors, a DoT official said.

“The government’s goals such as broadband for all and proliferation of 5G are its highest priority. Hence, we have asked Trai to review the entire architecture of auctions… the reserve price, they will look at the participation, and the possibility of greater competition…,” the official cited above said on condition of anonymity, adding that it has requested Trai to respond with revised recommendations within a month.

The Digital Communications Commission or DCC (formerly Telecom Commission), the highest decision-making authority in DoT, met on Thursday to review, among other proposals, Trai’s auction recommendations. The government is keen to conduct the auction, India’s first for 5G airwaves, in the current year.

In August, Trai had said the 3,300-3,600 MHz band, expected to be the primary band for 5G services, should be auctioned as a single band and in blocks of 20MHz each at Rs.492 crore per megahertz. While Bharti Airtel Ltd has said these prices are exorbitant and it would not participate in an auction held at these prices, Vodafone Idea Ltd has suggested the 5G auction take place in 2020. In South Korea, the same band was priced at roughly Rs.131 crore per megahertz in auctions held in June last year.

Trai has also been asked to offer suggestions on the pattern of deployment, eligibility criteria and method of payment for spectrum.

The government is in the process of finalizing a road map to roll out 5G services, the next-generation technology for wireless communications expected to improve data speed and propel Internet of Things. It is expected to yield industry-altering changes, especially in sectors such as agriculture, manufacturing, healthcare and education.

The Commission also approved a one-year trial period and a one-time fee of Rs.5,000 for entities seeking experimental spectrum to conduct 5G trials.

“This time, we want that all spectrum on offer (over 8,000MHz) should be auctioned and it should be optimized to contribute the maximum to the exchequer,” said the official cited earlier. Historically, an average of just 40% of the total spectrum put up for sale has been sold.

“It would have helped if DCC had explicitly asked Trai to suggest lower prices. However, the government’s focus on 5G coverage would suggest that this is what it wants,” said Mahesh Uppal, director at communications consulting firm ComFirst India. “It’s a welcome development that the government wants more spectrum to be put up for auction, which would hopefully lead to a cut in prices and wider participation in the auction.”

An email sent to the Cellular Operators Association of India, an industry body for telcos, remained unanswered till press time.

Given that the 700MHz band remained unsold in the last auction in 2016, Trai had then also proposed fixing the base price for the 700MHz band at Rs.6,568 crore per megahertz—43% below Rs.11,485 crore set in the 2016-17 auction. The high-value 700MHz spectrum is considered efficient for deploying 4G LTE networks and has greater structural penetration.

For airwaves in the 800MHz and 900MHz band, Trai suggested lowering prices by 21% and 51%, respectively.

The government did not auction any spectrum in fiscals 2017-18 and 2018-19. In 2016-17, the government had raised Rs.65,789 crore through spectrum sale, a fraction of the Rs. 5.63 trillion worth of spectrum, at base price, it had put up for sale. While the total spectrum put up for sale was 2,354.44MHz across seven bands, the government managed to auction just 965MHz.―Livemint