5G auction: Telecom panel to meet on September 19 to finalise spectrum price

The Digital Communications Commission (DCC) is scheduled to meet on September 19 to finalise the pricing and other modalities for the upcoming spectrum auction. As per sources, an internal committee of the DoT has already approved the revised recommendations regarding the auction submitted by the Telecom Regulatory Authority of India (Trai).

The regulator has largely stuck to its recommendation on the reserve price of spectrum, including for the 5G band. In June, amid an industry disquiet over pricing of spectrum, the DCC had decided to ask Trai to reconsider its spectrum recommendations to ensure competition and greater participation of larger set of players in auctions slated for 2019.

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

Trai had in August 2018 recommended auction of about 8,644 MHz of spectrum across bands at an estimated total base price of Rs 4.9 lakh crore, but the financially-stressed industry that is reeling under high debt had argued that proposed prices are unaffordable and exorbitant. For instance, for the 5G band in the 3300-3600 MHz where prices had been given for the first time at Rs 492 crore per MHz, for a pan-India minimum block of 20 MHz, operators would have to shell out Rs 9,840 crore, which is seen as steep. Similarly, though Trai had reduced the reserve price by 43% at Rs 6,568 crore per MHz for the premium 4G spectrum, still for a pan-India 5 MHz block, operators would have to shell out Rs 32,840 crore.

Going by global standards, the price of Rs 492 crore per MHz for 5G spectrum was seen on the higher side, as the South Korean auctions which happened last year had the price at Rs 130 crore per MHz. At the moment, the ecosystem for 5G services is not developed so even if auctions are conducted and operators win the spectrum, they will have to wait for a considerable period before it can be effectively used.

The DCC, which is an inter-ministerial panel, is the highest decision-making body of the DoT and although the internal committee of the department has agreed to Trai’s recommendations, the DCC has powers to make changes.

Communications and IT minister Ravi Shankar Prasad had earlier said the government plans to conduct the auction by the end of this year.