Telcos call for immediate 5G spectrum auction without reserve price

Telcos call for immediate 5G spectrum auction without reserve price

Bharat Bhatia, the president of telecom industry boday ITU-APT Foundation of India, said that 5G auctions have been bogged down due to high reserve prices


  • ITU-APT believes that the 5G reserve prices are too high that has resulted in no auction
  • At TRAI's recommended prices, each telco would have to spend Rs 50,000 crore for pan-India spectrum
  • TRAI chairman RS Sharma said that auction without reserve price is difficult
  • Since January, the 5G trial proposals of the telcos are lying with the DoT

In a rather strange twist to Prime Minister Narendra Modi's Atmanirbhar Bharat mission, the telecom industry body ITU-APT Foundation of India has asked Finance Minister Nirmala Sitharaman to hold 5G spectrum auctions (in 3.6 gigahertz and 26 gigahertz bands) without any reserve price so that the government's goal of a self-reliant India could be achieved.

In a virtual event, Bharat Bhatia, the president of the foundation, said that 5G auctions have been bogged down due to high reserve prices, and that there's a need to hold the spectrum auctions immediately. The foundation argued that the real market price cannot be determined as the whole industry is suffering.

Though TRAI chairman RS Sharma said that the 5G auctions without any reserve price may be difficult.

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In India, the base price of the 5G spectrum (in 3300 megahertz to 3600 megahertz band) is highest in the world. At telecom regulator TRAI's recommended reserve price of Rs 492 crore per MHz (megahertz), operators will have to pay around Rs 50,000 crore for 100 MHz pan-India spectrum - that's the minimum spectrum required to deliver 5G services (in sub-6000 MHz bands), as per global body ITU.

As per brokerage CLSA, the base price per MHz for spectrum in this band is $70 million in India as compared to $26 million in Italy, $18 million in South Korea, $10 million in the UK and $5 million in Australia.

Given the high level of stress in the sector, and the lingering Rs 1.69-lakh crore AGR (adjusted gross revenues) issue, the telcos seem to be in a precarious position and would likely not attempt to buy spectrum at the current prices. The telecom bosses, on various occasions, have termed the 5G reserve prices exorbitant.

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"Such demand is unlikely to be met. The government is staring at a revenue deficit this year. It would be interesting to see if Jio, which has been flushed with liquidity after a series of investments, could take a lead in the 5G race by participating in the auctions when they happen, and signal its rivals to raise their game," says a telecom analyst.

But there has been inordinate delay in the 5G trials and spectrum auctions already. Since last year, Telecom Minister Ravi Shankar Prasad has been talking about holding 5G trials. In January, about two months before the lockdown, the telcos had submitted their trial proposals with the Wireless Planning and Coordination Wing (WPC) at the Department of Telecommunications (DoT). But since then, there has been no action. It's unlikely that the trials would begin anytime soon - at least until the situation normalises.

As such, industry lobby body Cellular Operators Association of India (COAI) has said that the telcos don't need additional spectrum to maintain service quality during COVID times.

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Besides, the foundation has asked the DoT to de-license E and V bands to improve the last-mile access of the internet. It may be noted that TRAI had recommended that these high-frequency airwaves be given on allotment on a fixed fee basis rather than the usual auction route. The E and V bands are typically used to connect two mobile towers which are otherwise not connected with the fibre. At the moment, just about 22 per cent of the towers are connected through fibre.

The foundation further said that the small area and captive telecom licensing needs to be de-licensed to support industrial, captive and campus-based telecom networks which will strengthen the goal of Atamnirbhar Bharat. Indeed, localised telecom networks for industrial purposes are going to be the prominent use cases of 5G along with enterprise solutions, and enhanced mobile broadband.

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