Telecom Sector can see a Blockbuster 5G Spectrum Sale

The DoT has sought out the Telecom Regulatory Authority of India, seeking fresh recommendations on base prices of spectrum, ahead of the imminent 5G spectrum sale.

DoT Requests TRAI Recommendations on 5G Spectrum Sale

Interestingly, apart from the mid-band spectrum, the telecom department has also included 700 MHz and the mmWave band. Apart from these, the DoT sought fresh base prices for 4G airwaves as well, such as the 800 MHz, 900 MHz, 1.8 GHz, 2.1 GHz and 2.3 GHz. However, given the time it takes for the consultation process, sources say that it looks less likely to meet the deadline of Q4FY22.

Speaking with ET, V Raghunandan, the TRAI secretary, said, "we have received a detailed reference from DoT about 2-3 days back, seeking our recommendations on spectrum matters and pricing…there are a number of spectrum bands involved, and the Authority is currently examining the reference and will respond to the government".

The DoT has also sought recommendations for terms of reference, and the size of the spectrum for the sale.

The Consultation Process

After it acknowledges the request, TRAI will seek additional details before it starts working on the recommendations. The sector regulator will conduct the consultation process before formulating its recommendations.

Since TRAI has received the reference from DoT, now it will conduct a four-week long process, seeking views from the stakeholders after it floats a consultation paper. After this, TRAI will give 2 weeks for counter comments. Following the process, the sector regulator will then conduct open-house discussions before compiling the recommendations.

Under normal circumstances, the whole process takes about 4-6 months.

TRAI then sends the recommendations to the Digital Communications Commission, the highest decision-making body in the telecom sector. The DCC can accept or reject any suggestions. Finally, the Cabinet takes the decision on the spectrum price, based on the final recommendations approved by DCC.

Following this, DoT will issue a Notice Inviting Applications, which will contain the final 5G spectrum sale rules. The sale happens around 45 days after the NIA is first issued.

Ideally, though, this entire process will take almost a year; it looks likelier by the day that the sale will get delayed. What's more, a report had surfaced recently, that suggested that the government might defer the sale to Q4FY23, that is, January-March 2023.

Why We Need a Pricing Overhaul

During the press conference on 15th September, when the government announced the telecom relief package, the telecom minister had acknowledged that high spectrum pricing has caused great financial stress in the telecom industry. He had said that the government will "rationalize" the price in public interest.

Analysts have said that given the huge cuts on levies, the telcos can see a lot of annual cash relief. This can see Reliance Jio and Bharti Airtel compete aggressively in the auction; Vodafone Idea can do so too, if it manages to finally close its 25,000 crore fundraiser.

At the TLF 5G Conference conducted by Voice&Data, both Airtel and Vodafone had sounded for rationalization of spectrum pricing. The last recommended price was Rs 492 crore for a mid-band 5G unit; deemed too expensive by telcos. Furthermore, the telcos have been asking the government to diversify the spectrum offerings. They claim that without the mmWave, 5G won't be affordable.