Trai sticks to stance on pricing of spectrum for 5G, other bands

Regulator Trai Monday firmly stuck to its recommendation that radiowaves used for telecom services on 5G and other bands should be auctioned at a start price of over Rs 5.7 lakh crore, dashing hopes of financially-stressed companies such as Bharti Airtel which had desired a lower base price. Responding to a plea from the Department of Telecommunications (DoT) to reconsider the base price for auction of different frequencies, TRAI said it had considered all relevant factors, including developments since the last auction in October 2016, in giving its price recommendations in August last year and further "reiterates" the same now.

The plea was from the Digital Communication Commission (DCC), the highest decision making body in the DoT. Trai said that its August 2018 recommendations on spectrum valuation and reserve prices never mentioned anything on financial health and capability of the companies to bid, and what is being attributed to it now is, in fact, a concern expressed by a section of stakeholders as part of the consultation process.

The last spectrum auction in October 2016 saw only 40 per cent of the spectrum offered being sold. In that auction, the government had garnered Rs 65,789 crore from sale of just 965 MHz. The entire 2,354.44 MHz that was on offer at the base price of Rs 5.63 lakh crore. Among the bandwidth which went unsold was the valuable 700 Mhz which telcos gave a miss, citing high base price.

The government, which did not auction any spectrum in 2017-18 and 2018-19 fiscal, wants to hold the nation's biggest auction of over 8,000 MHz of airwaves this year. In August 2018, Trai 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 20 MHz each at Rs 492 crore per MHz. Old telecom operators had dubbed the rate as exorbitant arguing that average price of 5G band auctioned in countries like South Korea, Spain, the UK and Italy worked out to be Rs 84 crore/MHz.

For the high-value 700 MHz spectrum, which is considered efficient for deploying 4G LTE networks and has greater structural penetration, Trai recommended fixing a lower base price of Rs 6,568 crore per MHz, 43 per cent lower than Rs 11,485 crore set in the 2016 auction. "The Authority considered all the relevant factors, inter-alia, including the methodology, assumptions, developments between the spectrum auction held in October 2016 and its recommendations dated August 1, 2018, and the rationale for spectrum valuation and reserve price while giving its recommendations," Trai said Monday.

Further, the watchdog said it "reiterates the Spectrum Valuation and Reserve Prices as contained in its Recommendations dated August 1, 2018". The DoT, seeking reconsideration of all recommendations on spectrum auctions, had stated that the demand for airwaves is likely to be "subdued" due to consolidation in the market that effectively has only three private telecom service providers.

In response, Trai said the auction is open to additional players and the goal of Digital India for the proliferation of broadband was at the centre of its recommendation for auctioning the entire available spectrum. It, however, agreed with the DoT view and reduced the minimum amount of spectrum that an existing licensee is required to bid in the 900 MHz and 1800 MHz bands to 0.2 MHz from 0.6 MHz earlier.

Out of the 5G spectrum, ISRO has requested for leaving 25 MHz (from 3400 MHz to 3425 MHz) untouched. In view of this, Trai said, "the block size for 3300-3600 MHz band may be kept as 5 MHz, in place of earlier recommended 20 MHz".

With DoT seeking review of previously recommended 5-year lock-in on the 5G spectrum, Trai agreed to reduce the lock-in for spectrum trading to two years -- as in the other bands but with no roll-out obligations. When contacted, industry body Cellular Operators' Association of India (COAI) said it was disappointed that Trai has chosen not to review and reduce its recommended reserve prices.

"This puts in serious jeopardy the 5G aspirations of the government and the potential benefits to citizens. We hope the Digital Commission and Cabinet will review this TRAI recommendation and make the right decision in the interest of the country," COAI Director General, Rajan S Mathews said.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)