Telecom regulator Trai on Monday recommended about 39 per cent reduction in the reserve or floor price for the sale of spectrum for mobile services, including the latest 5G offering, as it looked to match revenue expectations with the industry's paying capacity.
With large swathes of spectrum remaining unsold in the last two auctions, the Telecom Regulatory Authority of India (Trai) recommended to the government for selling airwaves in all existing bands of 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz and new slots of 600 MHz, 3300-3670 MHz and 24.25-28.5 GHz.
It has suggested a lower reserve price for all bands, compared to the prices proposed in the previous recommendations in 2018.
When contacted, Trai chairman P D Vaghela told PTI that 5G recommendations have been framed after a "careful analysis" following stakeholder consultation, and wide discussions. The recommendations are in the interest of the telecom sector and the country, Vaghela added.
In a 20-year scenario, the floor price in the 700 MHz band has been cut by 40 per cent to Rs 3,927 crore per MHz for a pan-India spectrum while the same in 800 MHz has been lowered by 22 per cent to Rs 3,620 crore per MHz, pan-India.
For the prime 5G frequency of 3300-3670 MHz band, the all-India reserve price adds up to Rs 317 crore per MHz, which is over 35 per cent lower than the Rs 492 crore/MHz suggested by Trai last time around.
All in all, it has mooted nearly 39 per cent lower base price across all bands referred to it, as compared to the last time.
The move to cut reserve price follows more than 60 per cent of the spectrum put on the block at the auctions in 2016 and March 2021 remaining unsold.
The industry has since then been seeking realistic pricing in an essentially three-player market where most airwaves typically gets sold at the base price.
If the price is not in line with the industry's expectations, the spectrum could remain unsold.
Bharti Airtel chairman Sunil Mittal had previously spoken of "appropriate" pricing of spectrum.
"If you go back to the 2010 auction of 3G and BWA, that was the starting point of the problem.
"Pricing went 5-6-7 times from the reserve price that became the bane of this industry as there were 6-7 players for three slots. Now whatever reserve price you put, the spectrum will mostly go at that price as there are not many competitors," he had said.
Trai's latest recommendations will set the groundwork for spectrum auctions in 2022, to facilitate the rollout of 5G mobile services within 2022-23, by private telecom providers.
The market is gearing up for the rollout of 5G services, that will usher in ultra high speeds and spawn new-age services and business models.
"The reserve price of spectrum allocation in case of 30 years should be equal to 1.5 times the reserve price of spectrum allocation for 20 years for the respective band," Trai said.
In the millimeter band, that is 24.25-28.5 GHz band, all India base price adds up to Rs 7 crore per MHz.
Trai further said that for the long-term growth and sustainability of the telecom sector, infusing liquidity and encouraging investment, the telecom service providers should be allowed easy payment options, including part payment with the flexibility of moratorium.
"To provide flexibility to the telecom service providers, block size of 10 MHz for 3300-3670 MHz band and 50 MHz for 24.25-28.5 GHz band recommended.
"Spectrum to be assigned in a contiguous manner," Trai said in a statement.
The sector watchdog said that considering the fact that presently band plan for the frequency range 526-612 MHz is yet to be defined by international bodies, and the development of the ecosystem in the 526-612 MHz frequency range will take some time and ministry of information and broadcasting is using 526-582 MHz band extensively across the country for TV transmitters "the 526-612 MHz frequency range should not be put to auction in the forthcoming auction".
"DoT should come out with a plan for refarming the 526-582 MHz band to be utilized for IMT deployments.
"To make the 526-582 MHz band available for IMT, DoT should work with MIB to prepare a plan for an early migration from Analogue to Digital Transmission, so that the frequency band from 526-582 MHz can be vacated for IMT services," Trai said.
Unlike existing coverage-based rollout obligations, considering deployment of 5G network in 3300-3670 MHz and 24.25-28.5 GHz bands, easy network deployment-based roll-out conditions have been recommended for these bands.
As per Trai, spectrum caps too have been rationalised. Overall cap across all bands has been done away with. Trai has suggested a cap of 40 per cent on combined spectrum holding in sub-1 GHz bands.
Trai has recommended a cap of 40 per cent on combined spectrum holding in 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands, while an individual band-specific cap of 40 per cent for 3300-3670 MHz and 24.25-28.5 GHz spectrum bands has been suggested.
For ease of doing business, easy and transparent spectrum surrender norms with a fee of Rs 1 lakh per spectrum band per licenced service area have been suggested.
The frequency range 27.5-28.5 GHz should be used for IMT as well as Satellite Earth Station Gateway (Earth to space) on a coexistence basis, Trai said.
On private networks, Trai said enterprises may request telcos to establish an independent isolated private network in the enterprise's premises using the telecom service providers' spectrum.
"Enterprise may obtain the spectrum on lease from TSPs and establish their own isolated Captive Wireless Private Network...Enterprise may obtain the spectrum directly from the Government and establish their own isolated Captive Wireless Private Network," Trai said.
In 2018, Trai had recommended a reserve price of Rs 492 crore per MHz for the 3300-3600 MHz band.
The price meant that for a pan-India minimum block of 20 MHz, operators would need to shell out Rs 9,840 crore, which was seen as very high.
As telcos need about 100 MHz to offer pan-India 5G services, this price means they would need to cough up Rs 49,200 crore.
In the current round, a minimum block of 20 MHz of pan-India spectrum in 3300-3600 MHz band would cost Rs 6,340 crore and the requirement of 100 MHz would need Rs 31,700 crore.
Similarly, for the 700 MHz band, companies will need to shell out Rs 19,635 crore for a pan-India 5 MHz block as against Rs 32,840 crore previously.