Telecom panel seeks clarity from Trai over reserve pricinghttps://indianexpress.com/article/business/companies/telecom-panel-seeks-clarity-from-trai-over-reserve-pricing/

Telecom panel seeks clarity from Trai over reserve pricing

Price was set at four times of the 1,800 MHz band’s discovered auction price.

Spectrum pricing, Telecom panel, 700 MHz spectrum band, spectrum band, Trai, reserve spectrum pricing, india news
A DoT official said that questions were raised pertaining to the rationale behind setting the reserve price of the said spectrum frequency at Rs 11,485 cr per MHz.

The Telecom Commission, which is the apex decision-making body of the Department of Telecommunications (DoT), on Monday sent back the recommendations of the Telecom Regulatory Authority of India (Trai) on auction of 700 MHz band seeking more clarity on issues such as reserve price and the amount of spectrum to be sold.

A DoT official said that certain questions were raised inside the meeting, particularly those pertaining to the rationale behind setting the reserve price of the said spectrum frequency at Rs 11,485 crore per MHz.

Ideally, the official said, the telecom regulator considers parameters such as market data analysis, technical efficiency, surplus and requirement, and the discovered price of last auctions before arriving at a reserve price for auction of any spectrum band. However in case of the 700 MHz band, the reserve price was set at four times of the 1,800 MHz band’s discovered auction price.

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The government official also said that the auction of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz has been planned to be held in July.

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Globally, the 700 MHz band is used for deployment of 4G, or LTE services, due to its efficiency and higher penetration capability inside buildings. Due to lower frequency it is also possible for the band to provide wider coverage, which reduces number of towers required for setting up the LTE network.

Trai, in its recommendations sent to DoT in January, mooted that the government auction seven blocks of the 700 MHz band, each block being of 5 MHz. The government official said that the logic behind auctioning all the seven blocks was also sought, and asked why some airwaves in the said frequency could not be auctioned over a period of time.

At the reserve price recommended by Trai, the government can yield around Rs 4 lakh crore only from auction of the 700 MHz band. The industry, citing spending constraints, had also suggested that the government only auction part of the 35 MHz spectrum available in the said band.

The top four telecom companies in the country — Bharti Airtel, Vodafone India, Reliance Communications and Idea Cellular — together had a topline of less than Rs 1 lakh crore during the first six months of the ongoing financial year.

Incidentally, soon after Trai recommendations on pricing of the 700 MHz band were issued, global ratings agency Fitch had said that these four companies were unlikely to bid for airwaves in the said frequency.