Panel okays 5G spectrum auction plan

Over 8,300 MHz, including for 5G services, will be put up in 2020; reserve price fixed at ₹5.22 lakh crore

December 20, 2019 10:15 pm | Updated December 26, 2019 12:55 pm IST - NEW DELHI

Dissenting note: High reserve prices may make it difficult for telcos to bid, says COAI’s Rajan Mathews.

Dissenting note: High reserve prices may make it difficult for telcos to bid, says COAI’s Rajan Mathews.

The Digital Communications Commission (DCC) on Friday approved plans to auction over 8,300 MHz of spectrum, including airwaves to be used for offering 5G services, with a reserve price of ₹5.22 lakh crore.

However, in a setback to the telecom service providers (TSPs), there has been no reduction in the reserve price, as demanded by them, for the airwaves that will be put to bid in March/April 2020.

“The DCC has today approved the recommendation of Telecom Regulatory Authority of India (TRAI). We are hopeful that auction should be conducted sometime in March-April,” Telecom Secretary Anshu Prakash said.

The Secretary said that the entire available spectrum — a little over 8,300 MHz across 22 telecom circles with a reserve price of ₹5,22,850 crore — will be put up for bidding. Out of the 8,300 MHZ of airwaves, 6,050 MHZ are allocated for 5G services.

Mr. Prakash added that an ‘important change’ in the payment process for the bought spectrum has been made. In the auctions, the telcos will need to pay lower upfront amount in case the spectrum won by them is not be available with the DoT in the next 30-day period.

Upfront payment

As per the earlier rules, successful bidders had to pay upfront 25% of the charges for sub-1 Ghz band and 50% of charges for higher frequency bands. Now, “in case the spectrum won is available later... say after six months, after eight months, the upfront payment will be 10% for sub-1 Ghz and 20% for higher frequency bands. This is so that we know that the bidder is a serious player,” he said.

The spectrum which is being put on auction includes airwaves that may get vacated up to December 2021.

Asked about impact of the decision to not reduce the prices, which has been a key demand of the rom the telcos, Mr. Prakash said, “The entire amount is not needed to be paid upfront... we expect good participation because TSPs now require spectrum. Their services and networks are expanding, some licences are expiring, so there should be good competition in bidding.”

The proposal will now be sent to the Cabinet for approval. “The DCC’s decision to proceed with spectrum auctions in the near future may be fraught with challenges. With spectrum reserve prices 4 to 6 times higher than that of similar spectrum sold recently in several countries, high levels of debt and prevailing financial stress in the sector, telecom service providers will find it very difficult to raise funds to participate in the auctions,” Rajan S. Mathews, DG at operators’ body COAI said.

He added that the quantum of spectrum in the 5G band being put up for auction will be only 175 MHz, ‘woefully inadequate’ for operators to roll out robust 5G networks and services. “It will be prudent to let the sector regain some financial strength from the recent initiatives undertaken before scheduling the auction. The interim period can be used to design and test India specific 5G use cases,” Mr. Mathews said.

Other decisions

Separately, the DCC also approved submarine fibre cable connectivity between Kochi and Lakshadweep island, under which 11 islands will be connected through 2,041 km of submarine cables. The project is estimated to cost ₹1,072 crore and will require the Cabinet’s approval.

The apex decision making body also approved using of VSAT (very small aperture terminal) to provide connectivity to forces (Defence/Paramilitary) in border areas or remote areas. “With the VSATs, we will be able to provide connectivity from 1-10 MBPS with a contention ratio of 1:10 (if there are 100 people, 10 people can use it any point in time) and along with the VSAT we will provide an access point and an Internet connection. Also, we will provide 1GB data free,” Mr. Prakash added.

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