Telecom regulator may review 5G pricing if Centre suggests
Trai may consider lowering base price on Centre’s direction
NEW DELHI: The telecom regulator may consider lowering the minimum price for 5G spectrum if the government directs it to do so because of concerns that the pricing set for the airwaves could hurt the rollout of the latest wireless technology.
“The government has to take a call. If the telecom department feels that the reserve price should be lowered with reasons to support it, then the regulator may look into it,” said a person directly aware of the telecom regulator’s stand on the issue.
The Telecom Regulatory Authority of India (Trai) recommended a base price of ₹492 crore per MHz of spectrum in the 3,300-3,600MHz bands, ideal for 5G, in August 2018. Operators have, however, claimed the spectrum was overpriced and needed to be brought down substantially to make 5G services viable. The department of telecommunications (DoT) must give strong reasons to the telecom regulator to revise the current base price for 5G spectrum; else, it may become a “compliance issue”, with questions raised on the methods of Trai, the person cited above said on condition of anonymity.
While telcos consider the base price for 5G spectrum exorbitant, compared with other countries, Trai believes the price is among the lowest in the world, according to a standing committee report tabled in Parliament earlier this month.
The standing committee on information technology told DoT that long-term consumer benefit, rather than short-term revenue maximization, should be the guiding principle to fix the base price for 5G spectrum.
Factors such as per capita income and average revenue per user should also be considered.
While a date is yet to be announced for the 5G spectrum auction, 4G spectrum goes under the hammer on March 1.
“With the spectrum (for 4G auction in March) priced at an eye-watering ₹3.92 lakh crore, the government is signalling that it cares much more about maximizing spectrum revenue than maximizing network quality,” Deutsche Bank said in a 15 February report.
According to brokerage ICICI Securities Ltd, Reliance Jio, Bharti Airtel and Vodafone Idea’s earnest money deposits of ₹10,000 crore, ₹3,000 crore and ₹475 crore, respectively, indicate their potential spectrum payouts at ₹70,000 crore, ₹21,000 crore and ₹3,300 crore, in the March auction. The person cited above also said DoT will soon allocate spectrum on an administrative basis for 5G trials. However, he expressed doubts over the number of telcos that will be willing to buy spectrum for trials.
DoT secretary Anshu Prakash told the parliamentary standing committee that the Centre will conduct the auction for 3,300-3,600MHz spectrum bands in the next six months.