Explained | Why are telecom companies upset with TRAI despite its proposal to cut spectrum prices by 40%?

Why has the spectrum price been cut?  

The story so far: The Telecom Regulatory Authority of India (TRAI) this week released recommendations on auction of spectrum, including those likely to be used for offering 5G services. The telecom regulator has suggested cutting prices of airwaves across various bands by 35-40% from its earlier proposed base price. However, the Cellular Operators Association of India, whose members include the three private telcos, Bharti Airtel, Reliance Jio and Vodafone Idea, has expressed disappointment, given the industry’s demand for a 90% reduction in the prices.

The telecom regulator has recommended that all available spectrum in the existing bands — 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz — should be put up for auction, along with airwaves in new bands such as 600 MHz, 3300-3670 MHz and 24.25-28.5 GHz. In all, more than 1,00,000 MHz of airwaves have been recommended to be put up for auction. The total spectrum on offer at reserve price is valued at about ₹5 lakh crore for 20 years.

For the 3300-3670 MHz band, which has emerged as the prime spectrum for 5G and is likely to be used for deploying 5G in India, the all-India reserve price has been lowered by about 35.5% to ₹317 crore/MHz, from ₹492 crore/MHz recommended earlier. Similarly, the reserve price for the premium 700 MHz band, which saw no takers in the previous auction, has been cut by 40% to ₹3,927 crore/MHz, from about ₹6,568 crore/MHz.

TRAI has determined the reserve price for spectrum bands based on a 20-year spectrum holding period. The reserve price for the increase in spectrum holding period to 30 years would be 1.5x the recommended reserve price for 20 years.

It has also recommended several options for the uptake of Captive Wireless Private Networks (CWPNs), including private networks through telcos, independent isolated network in an enterprise’s premises using telcos’ spectrum, allowing enterprise to take spectrum on lease from telcos or directly from Department of Telecom (DoT) to establish their own isolated captive private networks. TRAI also suggested that enterprises may obtain the spectrum directly from the government and establish their own isolated CWPN.

Given the financial stress in the sector, the government had in November, written to the regulator emphasising the need to strike a balance between generating revenue and the sustainability of the telecom sector in a way that telecom service providers are in good health with sufficient capacities to make regular and substantial capital expenditure for transitioning to 5G technology. It had also highlighted that spectrum lying idle was a waste for the economy.

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