The right price: on TRAI’s latest recommendations

The Telecom Regulatory Authority of India’s latest recommendations on the auction of airwaves identified for 5G services, particularly the pricing of spectrum, have triggered disappointment within the industry. While TRAI has proposed cuts of about 35-40% on the reserve prices at which the relevant frequency bands of spectrum could be auctioned, telecom services providers contend that the recommendations run counter to the spirit behind the relief-cum-reforms package unveiled by the Government last September. In acknowledging the extent of stress as well as the ripple effects that protracted distress in the industry would have on the economy, the Union Cabinet had at the time decided among other measures to increase the tenure of spectrum assignment to 30 years, from 20 years. The regulator, however, has proposed charging 1.5 times the reduced reserve price for a 30-year tenure on spectrum thereby virtually negating the proposed cut and undermining the Government’s aim of making spectrum affordable enough to encourage greater participation in the auctions. Ironically, TRAI’s recommendations cite a November letter from the DoT which had underscored the fact that only 37% of the spectrum on offer at the last auction had been sold, showing that the regulator was conscious of the need to further rationalise the reserve price. TRAI’s reasoning for the reserve prices, an elaborate consultative process notwithstanding, appear steeped in a conservative approach that discounts the challenges the industry is currently facing as well as the significant capital investments needed to modernise the country’s telecom networks.

A look at some of the countries that have so far successfully rolled out 5G networks shows that Japan and South Korea avoided auctions and instead adopted the discretionary approach to spectrum allotment. True, this approach was abandoned by India after the Supreme Court in 2012 struck down the grant of 2G licences and mandated auctions as the best method to obviate malfeasance in the exercise of discretionary powers. Still, an auction would ensure that the resource being offered is actually bid for and utilised only if the price is viable for the industry. India’s telcos point to the fact that even today their ability to invest in the infrastructure required to cover the length and breadth of the country and simultaneously ensure optimum reach and availability of signals in dense urban areas is somewhat constrained by the high cost of spectrum relative to the global average as well as one of the lowest realisations in terms of average revenue per user. For the Government to realise its goal of netting optimum revenue from the auction of spectrum even as it ensures that India does not end up lagging behind in the rollout of 5G telecom services, policymakers need to insist TRAI revisit its recommendations. The economy can ill afford any further disruptions in the linchpin sector.

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Printable version | Jun 25, 2022 2:20:02 am | https://www.thehindu.com/opinion/editorial/the-right-price-on-trais-latest-recommendations/article65332521.ece