That alongside the lack of enough locations for mobile towers, the short supply of spectrum being responsible for the incessant call drops and poor quality of telecom services is evident from the numbers. India has so far allocated 220 MHz of mobile spectrum, compared with 608 MHz in the US and 353 MHz in the UK. However, India had 1.12 billion mobile subscribers as of end-2016, whereas the US and the UK had around 400 million and 92 million, respectively. This shortage in quantum of spectrum allocation has been red-flagged by the steering committee set up by the Centre to suggest a road map for adoption of 5G in the country. Stating the importance of a supportive spectrum policy for deployment of 5G in the country, the panel headed by Stanford University Professor Emeritus AJ Paulraj has called for the government to correct these anomalies in 5G. “India’s quantum of spectrum allocation needs a big fillip. For example, total licensed mobile spectrum is about 220 MHz as compared to 608 MHz in USA and 353 MHz in UK. Further, the cost of spectrum, relative to per capita GDP, is much higher than most countries. Both these factors drive up infrastructure costs. Also, in recent years, the high cost of spectrum has left large quantities of unsold spectrum. It is important that India correct these anomalies in 5G,” a sub-group on spectrum policy within the committee noted. In its report submitted the telecom department on Thursday, the panel has suggested phase-wise allocation of 5G spectrum including 405 MHz (readily-available) and additional 137 MHz (involving further studies) of sub 4 GHz radiowaves, and 5.25 GHz along with 8.3 GHz of sub 45 GHz category. Shortage of spectrum, along with a lack of enough locations for towers, has been cited by telecom companies as one of the key reasons behind incessant call drops and poor quality of services. Back in 2015, when the issue of call drops was a raging one, operators called for the government to free up spectrum in the key 900 MHz and 1800 MHz frequencies, which were essential for 2G services on which voice calls traveled then. The Centre, however, had called for better spectrum management practices from the operators. Out of the total quantum of spectrum put up for sale in the last auctions in October 2016, nearly 60 per cent went unsold with operators citing the high prices as a key deterrent. Following the tepid response, the Telecom Regulatory Authority of India (TRAI) has a 15 per cent lower base price for the next auctions than that for the previous sale. Notably, the entire quantum in the 700 MHz band that was put up for sale went unsold despite the frequency being the most efficient band for 4G services. Despite TRAI recommending lower prices for spectrum, which are yet to be cleared by the DoT, experts believe the next auctions may see muted response from operators given their financial condition. The top-4 telecom companies — Bharti Airtel, Idea Cellular, Vodafone India and Reliance Jio – have a combined net debt of Rs 2.9 lakh crore, which is primarily said to be on account of expensive spectrum payouts and infrastructure costs. The financial situation since the previous auction has only worsened due to intense competition in the sector that has seen operators reduce tariffs to a third of what it was two years ago. “Considering multiple spectrum auctions over the last few years, consolidation among operators and trading and liberalisation of spectrum, we believe there is enough spectrum available to telecom operators. Given strained balance sheets, the operators are unlikely to buy more spectrum. This would keep spectrum prices in check, which is beneficial for the long-term health of the industry,” Edelweiss Securities said in a research note. Due to poor financial condition of most operators now and the M&A activities, the narrative of spectrum shortage has flipped, and experts believe that the market for radiowaves has turned into a buyer’s market with operators exercising significant restraint in bidding. “Spectrum in India has decisively turned into a buyer’s market and operators are likely to acquire spectrum only as and when they need it; they are likely to be selective based on their needs rather than accumulate spectrum. At current tariffs, operators’ revenues are not able to cover their operating costs and network capex, and their free cash flow is not enough to pay interest on spectrum acquired in the previous auction. We expect them to be cautious while bidding in any auctions conducted in medium term,” as per a research note authored by Kunal Vora of BNP Paribas.
