DoT may ask TRAI to cut prices of 5G spectrum

The department of telecommunications (DoT) is likely to ask the regulator to lower the minimum price for the auction of 5G airwaves, a person directly aware of the development said.

Telecom operators have insisted that the floor price recommended by the Telecom Regulatory Authority of India (Trai) is “unaffordable” and will seriously hamper the introduction of 5G services in India.

DoT will also ask the sector regulator to review the minimum price of the 700MHz band that has remained unsold in the past two auctions, the official said, requesting anonymity.

“We’ll have to go back to Trai as the situation has changed after the recent 4G auctions where 700MHz band has remained unsold. However, it is finally up to the regulator whether they want to lower the prices,” the official added.

The reserve price for 5G spectrum has been set at ₹492 crore per MHz of spectrum in the 3,300-3,600MHz bands, which are considered ideal for 5G telecom services.

Spending thousands of crores on 5G spectrum for a pan-India rollout will be especially tough for Vodafone Idea Ltd and Bharti Airtel Ltd, which are recovering from the twin blows of an adverse court order on dues to the government and a bruising tariff war with Mukesh Ambani’s Reliance Jio Infocomm Ltd.

Trai had recommended the 5G spectrum base price in August 2018. The suggestions were then accepted by the Digital Communications Commission, the highest decision-making authority at the DoT, in the following year.

To prepare a 5G road map, the DoT on 26 February formed three working groups to review spectrum bands and suggest changes to the National Frequency Allocation Plan (NFAP), 2018.

The first working group will review sub-GHz bands, and the second group will assess the 1GHz- 6GHz spectrum band. The third group will look at airwaves above 6GHz.

The NFAP policy defines the road map for future spectrum usage by all national authorities, including the telecom department, the department of space and the defence ministry.

After a gap of four years, the government concluded a two-day 4G spectrum auction on 2 March. Of the seven bands the DoT put up for sale, airwaves in the 700MHz and 2,500MHz bands found no takers. The 700MHz band, which also went unsold in the 2016 auction, can best support 5G rollout due to its high efficiency, making it the most expensive band among the bands put on the block this time.

Telecom operators acquired 855.60MHz of spectrum, or 37%, of the total 2,308.8MHz put up for sale by the DoT for ₹77,814.80 crore. Reliance Jio was the most aggressive, bidding for spectrum worth ₹57,122.65 crore, followed by Bharti Airtel, which spent ₹18,698.75 crore to acquire pan-India sub-GHz, mid-band and 2,300MHz spectrum, and Vodafone Idea, which bought 11.80MHz spectrum worth ₹1,993.40 crore for renewal in five circles.

The Cellular Operators Association of India has warned that the high spectrum cost, with minimum prices set at 4-6 times those of similar airwaves sold in other countries, and financial stress in the sector will make it tough for telecom operators to raise funds to participate in the 5G spectrum auction. Mint