Trai refuses to budge on 5G spectrum pricing in upcoming auctions

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The Telecom Regulatory Authority of India (Trai) on Monday reiterated its recommendation on spectrum pricing in the upcoming auctions. In response to the Digital Communications Commission (DCC), the regulator said it had considered all the relevant factors, including methodology, assumptions, and developments in the telecom sector before giving its views.

Last month, the DCC had asked Trai to reconsider its spectrum recommendations amid financial stress in the sector and to also ensure competition and greater participation of a larger set of players in the upcoming auctions.

It had said that the demand for spectrum is likely to be subdued due to consolidation in the market, given there are effectively three private telecom service providers.

In its detailed response to the telecom department on Monday, Trai said it had considered all the relevant factors, including methodology, assumptions, developments between the spectrum auction in 2016 and its suggestions on August 1, 2018, and the rationale for spectrum valuation and reserve price while giving its recommendations.

“In view of the above, the authority reiterates the spectrum valuation and reserves prices as contained in its recommendations dated August 1, 2018,” said Trai.

On the issue of putting the entire available spectrum on auction, the authority said, “In case, spectrum in those bands — whose validity is expiring by December 31, 2021 — becomes available earlier due to any reason such as surrender, cancellation, etc, such spectrum should be made available to the successful bidder immediately on its availability.”

The regulator has, however, yielded ground on the issue of lock-in period it had previously recommended for spectrum in the 3,300-3,600 megahertz (MHz) band (for eligibility on spectrum trading).

The telecom regulator has now suggested a lower lock-in period of two years for this band against five years prescribed earlier.

“The authority recommends that no roll-out obligations should be mandated for spectrum in the 3,300-3,600 MHz band. Further, lock-in period for spectrum in this band for becoming eligible for spectrum trading should be the same as in other bands, i.e., two years,” said Trai.

Trai had recommended a pan-Indian base price of Rs 492 crore per MHz for 5G radiowaves, while lowering the base price of frequencies that remained unsold in the 2016 auctions. Airwaves in the 3,300-3,600 MHz 5G band will be auctioned in the block size of 20 MHz.

The reserve price for the premium 700 MHz spectrum, which went unsold in the 2016 auctions, was reduced by more than 40 per cent to Rs 6,568 crore per MHz all-India from Rs 11,485 crore in 2016.

Trai recommended a base price of Rs 4,651 crore for paired spectrum in the 800 MHz band covering 19 circles, Rs 1,622 crore per MHz for the 900 MHz band covering seven circles, Rs 3,399 crore per MHz in the 2,100 MHz band covering 21 circles, and Rs 821 crore per MHz in the 2,500 MHz band covering 12 circles. It also suggested Rs 960 crore per MHz for unpaired spectrum in the 2,300 MHz band on a pan-Indian basis.

The central government earned Rs 65,789 crore from spectrum auctions in 2016. The bands sold were 2G, 3G, and 4G.

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