Trai releases norms for next spectrum auction, timing uncertain
02 Aug 2018
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The Telecom Regulatory Authority of India has recommended rules and prices for the next round of spectrum auction, which will include radio waves for 5G mobile services. The regulator has recommended that the base price for bidding should be the higher of the two figures — 80 per cent of the average valuation of spectrum band in the licensed service area and the price realised in the October 2016 auction, reports PTI.
The government is yet to finalise the timing of the next round of auction. The regulator has recommended base price of Rs3,285 per megahertz for 1800MHz band on pan-India basis.
According to The Economic Times, Trai has recommended slashing the base price of premium 4G airwaves in the 700 MHz band by almost 43 per cent, and set Rs492 crore per unit as the minimum rate for 5G spectrum that will debut in the next auction. While the sale could fetch the government over Rs5 lakh crore if all the spectrum is sold at the reserve prices, experts anticipate a lukewarm response by telecoms firms.
Airwaves across the 4G bands of 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2100 MHz, 2300 MHz and 2500 MHz, besides 5G spectrum in the 3300-3600 MHz bands, will be offered to the three telcos that are likely to be operational by then — Vodafone Idea, Bharti Airtel and Reliance Jio.
The starting prices for most bands were lowered from those set at the previous sale in October 2016. The next auction could generate some Rs5,06,110 crore for the government, or about nine times the Rs65,789 crore raised in October 2016, if all of the over 8,500 MHz of airwaves are sold at the base price, according to analysts cited by ET.
For 5G spectrum, it has issued recommendations for the proposed spectrum in 3300-3600MHz band and suggested that "reserve price of (this) band should be equal 30 percent of the reserve price of 1800MHz FDD band". It has suggested that spectrum in 3300-3600MHz band should be put up for auction in the block size of 20MHz.
"To avoid monopolisation of this band, there should be limit of 100MHz per bidder. Since the TSPs are allowed to trade their partial or complete spectrum holding to another TSP, the limit of 100 MHz spectrum in 3300-3600 MHz band shall also apply for spectrum trading," Trai said.
In a relief to the industry, Trai has suggested that the "reserve price of 700 MHz band should be equal to twice the reserve price of 1800MHz spectrum band" resulting in about 42 per cent reduction in price of this band at Rs6,568 crore per MHz.
For 2016 auction, government had fixed base price of 700MHz band at Rs11,485 crore per MHz. The price of spectrum in premium 700MHz band was fixed at four times the price of 1800MHz band - a frequency range which was known as 2G spectrum earlier.
In 2016, spectrum worth about Rs4 lakh crore was put up for auction but there were no takers for this band due to its high price. The regulator has recommended reduction of price in telecom circles where spectrum remained unsold in last auction of 2016.
According to ET, operators and experts said the sale will likely evoke a lukewarm response, with hardly any takers for both 700 MHz and 5G airwaves at current prices. Jio is currently the only profitable telco, while Vodafone India and Idea Cellular – on the verge of merging – and Bharti Airtel have slipped into the red due to tariff wars. Besides, the industry has a debt of over Rs7 lakh crore, primarily blamed on high bandwidth prices.
They said reducing the base price of airwaves wasn’t enough to spur bidding and levies such as licence fees and spectrum usage charges should be lowered.
