With industry concerns over high prices and the government’s objective of providing broadband to all under the Digital India initiative, the Telecom Department on Thursday decided to ask the Telecom Regulatory Authority of India (Trai) to reconsider its recommendations on spectrum pricing, particularly of the 5G band.
The move comes after Union Minister of Communications Ravi Shankar Prasad, soon after taking charge, said the government plans to conduct auctions within the current calendar year.
Under the Trai Act, the government can ask the regulator to reconsider its recommendations on any policy area barring telecom tariffs. If the latter does so, it is fine, but if it sticks to the original, the government is free to make changes which will override the recommendations.
In August 2018, Trai had recommended reserve price for the next round of auctions, which were considerably lower than what was fixed for the 2016 auctions — but it was still seen on the higher end, considering the industry’s financial position.
For instance, for the 5G band in the 3300-3600 MHz — where the prices had been given for the first time at Rs 492 crore per MHz for a pan-India minimum block of 20 MHz — operators would have to shell out Rs 9,840 crore, which is seen as steep.
Similarly, for the premium 4G spectrum, though the Trai had reduced the reserve price by 43 per cent at Rs 6,568 crore per MHz, for a pan-India 5 MHz block, operators still would have to shell out Rs 32,840 crore.
Going by global standards, the price of Rs 492 crore per MHz for 5G spectrum was seen on the higher side as the South Korean auctions which happened last year had the price at Rs 130 crore per MHz. Currently, the ecosystem for 5G services is not developed so even if auctions are conducted and operators win the spectrum they will have to wait for a considerable period before it can be effectively used. —FE