The Digital Communications Commission, the decision-making body for the Telecom Ministry, on Thursday decided to refer the spectrum auction recommendations back to regulator TRAI, seeking revisions in the entire proposal including the crucial reserve prices and finding ways to create more competition. It also approved the guidelines to grant trial spectrum for 5G services this month.
“The DCC didn’t go into the issue of pricing as such… it only said if these recommendations are capable enough to sell all the spectrum and also if they are in line with 5G and broadband for all objective of the Central government.
“But now that the recommendations are going back to TRAI, we are asking them to review the entire architecture… they will look at reserve price, participation, greater competition and meeting policy objectives. But TRAI may or may not revise the recommendations… it is up to them. They may stick to their stand,” an official source said.
Sources also said in the current auction, about 8600 Mhz of spectrum – which is already the largest amount of spectrum – is being planned to be sold off. In addition to that, more spectrum has been released because of harmonisation and the DoT standing committee has also recommended that the administratively-allocated spectrum, given in 2001 to telcos and due to expire in 2021, should also be put into this auction.
So all these have increased the quantum of total spectrum available, the sources said, adding that therefore, the proposal is going back to TRAI for revisiting because of this additional quantum of the spectrum.
Telecom operators have been opposing the 5G spectrum price – as suggested by TRAI – of Rs. 492 crore per MHz which will cost them about Rs. 9,840 crore a block of 20 Mhz, saying that the base price of 5G radiowaves is nearly up to 40 percent higher than the rates in markets like South Korea.
TRAI had recommended auction of about 8,644 MHz of telecom frequencies, including those for 5G services, at an estimated total base price of Rs. 4.9 lakh crore, but the stressed industry has contended that prices are unaffordable.
According to the official source, about 40 percent of the spectrum has been auctioned in the past but this time, the DCC members were of the view that ideally all spectrum should be auctioned as there will be no value to society unless it is sold in volume.
In light of Prime Minister Narendra Modi wanting India to become a $5 trillion digital economy, the auction should be optimised for giving the maximum to the exchequer, they said.
The other reason for referring it back to TRAI is the regulator had not recommended eligibility criteria, methodology of auctions and method of payment, and now will have to give detailed recommendations, the sources said.
The regulator had not given roll out obligations but, instead, had suggested a lock-in period of five years which has met opposition from the department who feels the lock-in period of spectrum trading should be reduced to two years. DCC members, however, feel that the spectrum auction should be designed in such a way that it encourages maximum participation rather than being restrictive.
On experimental spectrum, the sources said until now DoT used to give trial spectrum on an ad hoc basis for three months, but now for 5G trials, it will be given for a period of one year at a time which is extendable, compared to three months earlier, at a one-time cost of Rs. 5,000 per band with no royalty charges.
“We will be able to give 5G spectrum for trial immediately now that we have got the policy approval, once the Minister approves. The trial possibly could happen this month though the Minister has said within 100 days. There is a separate committee under the chairmanship of PSA (Principal Scientific Advisor) which is looking into it and once it takes a decision, we will give the nod for the trial,” said a source.
In 2016, the auction could garner only Rs 6,5000 crore through auction out of a proposed Rs 5 lakh crore estimated value of spectrum due to the high price of 700 Mhz.