The Telecom Regulatory Authority of India (TRAI) has finally released its recommendations on 5G spectrum. TRAI has suggested a 35-36 per cent reduction in the base price of the 5G spectrum band (3300-3670 MHz) to Rs 3.17 billion on a pan-Indian basis from the Rs 4.92 billion that TRAI had suggested in 2018. Further, the regulator has suggested a reduction of as much as 58 per cent and 45 per cent in the reserve price for the 700 MHz band in the key circles of Mumbai and Delhi respectively.
The recommendations also suggest offering more than 100,000 MHz of spectrum for auction, among the largest quantums to be put on sale till date. A number of new bands have entered the spectrum auction process, viz 600 MHz, 700 MHz, 3300-3600 MHz and 28 GHz, which will constitute more than 80 per cent of the total value of spectrum to be put up for auction. While the reserve prices have been revised downwards by around 35-40 per cent from the last spectrum auction, the total spectrum on offer is valued at a whopping Rs 5 trillion at the reserve prices.
Telecom operators, the key bidders in the 5G spectrum auctions, have been quite vocal about their disappointment with TRAI’s recent recommendations. As per the Cellular Operators Association of India (COAI), these recommendations indicate a very high spectrum price and will slow down the country’s digital transformation efforts.
While urging TRAI to revisit its spectrum pricing recommendations, the COAI has
stated that industry stakeholders had recommended 90 per cent lower prices for spectrum in the consultation process; however, TRAI has reduced prices by 35-40 per cent only. The COAI asserts that there is enough headroom to reduce spectrum prices by 90 per cent, in line with global norms.
The COAI further notes that despite the government’s intention to allocate 5G spectrum for a period of 30 years, TRAI has recommended spectrum allocation at the reserve price for 20 years. If an operator wants to purchase it for 30 years, a multiple of 1.5 times of the reserve price will be applied for the additional period.
However, there are some stakeholders that have welcomed TRAI’s move to slash prices and believe that this will take India closer to its 5G dream. They believe that the recommendations will enable service providers to make additional capital expenditure and launch new-age services and business models.
In this scenario, where the industry seems divided on the correct pricing strategy for 5G airwaves, all eyes are now set on whether the Department of Telecommunications (DoT) will approve TRAI’s recommendations. DoT has been emphasising the need to create a balance between generating revenues and ensuring telcos’ financial stability by rationalising spectrum prices. It is interesting to see how it helps the industry attain this balance.
