Telecom companies to seek parity in 5G price, reforms

NEW DELHI: The reserve price for 5G spectrum and licence period suggested by the Telecom Regulatory Authority of India (Trai) should be in sync with the government’s reform measures to ensure a smooth rollout of 5G services, according to telecom operators.

Leading telcos, including Bharti Airtel, Vodafone Idea and Reliance Jio, are likely to seek government intervention in rationalising the base price and extending the license period for 5G to 30 years, said two senior industry executives, requesting anonymity. “Both base price and 20-year spectrum validity, do not gel with the Centre’s massive reforms package, which specified spectrum must be provided for 30 years. There seems to be no harmony between the two,” said one of the two executives.

Trai recommended a starting price for 5G airwaves in the 3300-3670 Mhz of ₹317 crore per unit, or 36% lower than the base price of the previous auctions for a 20-year licence, and 1.5 times the amount if the validity was for 30 years. However, telecom operators said the government must cut the price by at least 90% and extend the validity to 30 years for 5G services to thrive.

“At this price the big question is should we invest on putting more 4G sites or buy spectrum for 5G, as we will have to invest in building 5G network from scratch, which will entail huge investments on top of the spectrum (price).”

Considering that the higher prices for a 30-year licence do not translate into more spectrum or efficiency, the move is not justified, he added. “Even if you look at other countries where 5G has been deployed, the revenue upswing is barely 5-7%. So, how does it justify the 1.5 times pricing at base level?”

A second executive said the government must intervene to arrive at more realistic prices for 5G bands, else it will delay the launch of 5G services.

Considering Trai’s suggestion that private firms can also directly get 5G spectrum from the government without an auction, telecom service providers have decided to meet Trai officials to highlight the fact that if these captive networks are allocated spectrum without a price differential in 5G prices, it will deal a death blow to both their enterprise businesses as well as overall business strategies. “Same service, same rules, same spectrum pricing, license conditions, security guidelines et al should apply if a firm is taking spectrum for a captive network, else our business fails completely, and does not create a good environment for investing,” the first executive added.

LEADING TELCOS ARE LIKELY TO SEEK GOVERNMENT INTERVENTION IN RATIONALISING THE BASE PRICE