DoT Plans to Ask TRAI to Reduce 5G Spectrum Prices

5G Spectrum Pricing

Earlier this year, telcos insisted that the floor price recommended by TRAI is “unaffordable" and will hamper 5G rollout. Sources report that DoT will also ask the sector regulator to review the minimum price of the 700MHz band. That is because it remains unsold even after 5 years and two auctions. The government department will go back to the apex regulator but the final decision lies with the latter. Interestingly, the reserve price for 5G spectrum has been set at ₹492 crore per MHz of spectrum in the 3,300-3,600MHz bands. The pricing is ideal for 5G telecom services. TRAI had recommended the 5G spectrum base price in August 2018. Digital Communications Commission, the highest decision-making authority at the DoT, in 2019.

However, Vodafone Idea and Bharti Airtel will find it tricky to buy enough 5G Spectrum for a countrywide rollout. Both the telcos are struggling with unfavorable court orders for their CAGR dues. Vodafone Idea is actively looking for funding, while Bharti Airtel is gaining traction, but it will be tough nevertheless. Furthermore, the Sunil Mittal-led telco also raised $1.5 billion recently to help with 5G rollout and 4G expansion. But, a tariff battle with Reliance Jio does not help their cause as the largest telco continues to bring out lucrative offers.

Roadmap for 5G Spectrum

Yesterday, I noted in the post about 5G Spectrum Auction that how a sound roadmap is necessary for a smooth rollout of 5G. Incidentally, the DoT formed three groups to review spectrum bands and suggest changes to the National Frequency Allocation Plan, 2018. These three groups will look at sub 1GHz, 1-6 GHz and over 6 GHz spectrum each.

Recently, the government concluded a second 4G spectrum auction in 5 years. Notably, the 700 MHz and the 2.5 GHz bands went unsold. The former can best support 5G rollout because of its high efficiency but it was too high priced for bidding. At the auction, Reliance Jio was the biggest buyer, acquiring spectrum across 22 circles for ₹57,122.65 crore, followed by Bharti Airtel, which spent ₹18,698.75 crore to acquire pan-India sub-GHz, mid-band and 2,300MHz spectrum, and Vodafone Idea, which renewed in five circles for ₹1,993.40 crore.

The Cellular Operators Association of India warned that the high spectrum cost, with minimum prices set as much as 6 times those other countries. Along with the financial stress in the sector, it will make it tough for telecom operators to raise enough cash to participate in the upcoming auction.