The Telecom Regulatory Authority of India’s latest recommendations on auctioning of airwaves identified for 5G services, especially the pricing of spectrum, has created dismay within the industry. While TRAI has proposed a reduction of around 35-40% on the reserve prices at which the relevant frequency bands of spectrum can be auctioned, telecom service providers argue that the recommendations are the spirit behind the relief-cum-reform package. move opposite. Last September, Govt. Recognizing the extent of the stress as well as the impact of the prolonged crisis in the industry on the economy, the Union Cabinet had decided among other measures to increase the tenure of spectrum assignments from 20 years to 30 years at that time. However, the regulator has proposed to charge 1.5 times the lower reserve price on spectrum for a tenure of 30 years, virtually negating the proposed cut and making the spectrum affordable enough to encourage more participation in the auction. The purpose of the government to create has been undermined. Ironically, Trai’s recommendations cite a November letter from DoT, which highlighted the fact that only 37% of spectrum was sold in the previous auction, indicating that the regulator may further rationalize the reserve price. was conscious of the need. TRAI’s rationale for reserve prices, despite an elaborate consultation process, appears to be steeped in a conservative approach that addresses the challenges the industry is currently facing as well as the significant capital investment required to modernize the country’s telecom network. gives a discount.
A look at some of the countries that have successfully launched 5G networks so far shows that Japan and South Korea avoided auctions and instead took a discretionary approach to spectrum allocation. True, this approach was abandoned by India in 2012 after the Supreme Court struck down the grant of 2G licenses and mandated auctions as the best way to address lapses in the exercise of discretionary powers. Nevertheless, an auction will ensure that the resource being offered is actually bid up and used only if the price is viable to the industry. India’s telcos point to the fact that even today their ability to invest in the infrastructure needed to cover the length and breadth of the country as well as spectrum to ensure optimum access and signal availability in dense urban areas somewhat hindered by the high cost of One of the lowest realizations in terms of global average as well as average revenue per user. In order for the government to achieve its target of maximizing revenue from spectrum auctions, even as it ensures that India does not lag behind in the rollout of 5G telecom services, policy makers should revisit their recommendations to TRAI. needs to be considered. The economy cannot tolerate any further disruption in the linchpin sector.