5G Spectrum Pricing: Trai Recommends 35% Lower Reserve Price For Prime 5G Frequencies
Telecom Regulatory Authority of India (Trai) has recommended a 35 per cent cut in the reserve price for prime 5G spectrum frequencies in 3300-3670 MHz band, at Rs 317 crore per MHz.
Releasing its much-awaited and slightly delayed (Telecom minister had said it should come before end of March) recommendations, Trai said that all available spectrum in the existing bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz and the new spectrum bands of 600 MHz, 3300-3670 MHz and 24.25-28.5 GHz, will be put to auction.
"To provide flexibility to the telecom service providers, block size of 10 MHz for 3300-3670 MHz band and 50 MHz for 24.25-28.5 GHz band recommended. Spectrum to be assigned in a contiguous manner," Trai said in a statement.
Welcoming the move Ankit Agarwal, MD, STL (Sterlite Technologies) said a 35 per cent reduction in the spectrum pricing is a very welcome move and will play a pivotal role in bringing the country closer to its 5G dream. "This will enable service providers to spend additional Capex and launch new-age services and business models. The lower budgetary obligation for spectrum will allow the telecom operators to strengthen their fiber penetration in backhaul infrastructure, bolster the initiatives around building broadband highways, connecting rural areas, and investing towards Open RAN - all essential prerequisites for 5G and fulfilling the vision of a truly connected country," Agarwal said.
Back of the envelope calculations show that the prime 5G frequency of 3300-3670 MHz band for an all-India reserve price works out to be Rs 317 crore per MHz, around 35 per cent lower than the Rs 492 crore/MHz suggested by Trai the last time. The base price for 700 Mhz band comes to around Rs 3,900 crore per Mhz. Again, this is estimated to be 40 per cent lower than what Trai had proposed the last time.
On the introduction of new bands, Agarwal of STL said: "The introduction of new bands and the Telecom Innovation Centres will further boost 5G use cases and applications in various sectors."
Trai said that for the long-term growth and sustainability of the telecom sector, infusing liquidity and encouraging investment, the telecom service providers should be allowed easy payment options. It also stated that the easy payment options must include part payment with flexibility of moratorium.
Speaking to BW Businessworld earlier this month, the Director General of the Cellular Operators Association of India (COAI), Lt. Gen. (Dr) S. P. Kochhar had also batted for lowering of spectrum charges. " There is a need to strike a balance between the Government’s aspiration to generate revenue from the auction and orderly growth of the sector and the overarching impact of 5G across the other sectors and the economy at large. The price of spectrum is the key to any efforts that attempt to balance these priorities.
Given the fact that in 2016 only 41 per cent and in 2021 only 37.1 per cent of the overall spectrum was sold, we suggest that the Reserve Price should be kept low so as to allow more efficient market discovery of the spectrum price.," Kochar had said.
The spectrum auctions are slated to be conducted in later part of 2022. This will facilitate the rollout of 5G mobile services within the current fiscal year.
