India to start 5G auction soon. TRAI recommends cutting spectrum prices across bands by up to 40%

Releasing its recommendations for the auction of airwaves, TRAI also suggested easier payment options for the operators

Releasing its recommendations for the auction of airwaves, TRAI also suggested easier payment options for the operators
Releasing its recommendations for the auction of airwaves, TRAI also suggested easier payment options for the operators

5G: TRAI slashes base price of 3300-3670 GHz bands, 700 MHz bands

In a relief to the telecom sector, India’s Telecom Regulatory Authority of India (TRAI) on Monday slashed the base price for airwaves by up to 40% across all spectrum bands, including the 5G spectrum. This will be a good advantage for the major players Reliance Jio, Airtel, and cash-strapped Vodafone-Idea. TRAI also suggested that all available spectrum in the existing bands — 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz — should be put up for auction, along with airwaves in new bands such as 600 MHz, 3300-3670 MHz, and 24.25-28.5 GHz. The government aims to conduct spectrum auctions in 2022 in order to enable the rollout of 5G services by private players before March 2023.

The Department of Telecom, in a letter to TRAI in November last year, had stressed the need to strike a balance between generating revenue and the sustainability of the telecom sector in a way that telecom service providers are in good health with sufficient capacities to make a regular and substantial capital expenditure for transitioning to 5G technology. It had also highlighted that only 37.1% of the spectrum put to auction in the previous auction was acquired by telcos and that spectrum lying idle was a waste of the economy.

“The inputs received by the authority during the consultation process also point to the need for further rationalization of the reserve price,” said TRAI in its more than 400-page recommendation. The regulator has also suggested that for uptake of 5G use cases in different verticals, a 5G-dedicated Inter-Ministerial Working Group (IMWG), under the Chairmanship of Member (Technology), DoT should be formed comprising the Ministry of Electronics and Information Technology, Department for Promotion of Industry and Internal Trade, Ministry of Information and Broadcasting, Department of Space, Ministry of Finance, Ministry of Education, Department of Science & Technology, Ministry of Micro, Small and Medium Enterprises (MSME) and NITI Ayog as members, which should be represented by Joint Secretary Level officers.

TRAI has recommended slashing of reserve price across all spectrum bands by up to 40% for a 20- year period compared with the base price suggested in its previous recommendations. For 5G airwaves in the 3300-3670 MHz band, the all-India reserve price comes to Rs.317 crore/ MHz, lower by 35.5% from Rs.492 crore/ MHz recommended earlier. Similarly, the reserve price for the premium 700 MHz band, which saw no takers in the previous auction, had been cut by 40% to Rs.3,927 crore/ MHz, from about Rs.6,568 crore/ MHz.

In the last auctions held in March 2021, a total of 2,308.80 MHz spectrum worth Rs.4,00,396.20 crore at reserve price was put to auction, out of which 855.60 MHz quantum was sold resulting in total winning bids worth Rs.77,820.81 crores. No bids were received in 700 MHz and 2500 MHz bands.

The telecom regulator TRAI has also suggested that the reserve price of spectrum allocation in the case of 30 years should be equal to 1.5 times the reserve price of spectrum allocation for 20 years for the respective band. “For the long-term growth and sustainability of the telecom sector, infusing liquidity and encouraging investment, the Telecom Service Providers should be allowed easy payment options including part payment with the flexibility of moratorium,” said the TRAI recommendation, seeking around a 40% cut in the base prices of all spectrum bands including the much-awaited 5G airwaves.

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