Fearing no takers, Govt to seek fresh pricing for 5G spectrum; Trai’s reserve price considered very high by industry

Official sources stated that along with the 5G spectrum in 3300-3600 Mhz band, the division of telecommunications (DoT) will even search pricing for millimeter wave band (24.25 GHz to twenty-eight.5 GHz) and 600 MHz spectrum band, which can be utilized for 5G providers.

With 63% spectrum remaining unsold within the auctions held in March, the federal government just isn’t taking any probabilities and has determined to hunt contemporary reserve value from the Telecom Regulatory Authority of India (Trai) for the 5G band which is prone to be put up on the market subsequent 12 months.

Although the Trai had in 2018 submitted the reserve value for 5G spectrum within the 3300-3600 Mhz — the public sale was not held for this band in March — it was seen as too excessive by the business. For the reason that premium 4G band within the 700 Mhz the place additionally the value was seen as too excessive, didn’t see any takers; the federal government needs a evaluation of 5G band fearing that in any other case business could not come ahead to purchase.

Additional, since round 70 MHz spectrum within the band is being added, a reference for brand new reserve value must be sought.

As it’s, the federal government feels embarrassed because the 700 Mhz band didn’t discover any takers for the second time in March auctions — earlier in 2016 auctions additionally it was not touched by the business.

The federal government is being doubly cautious because the spectrum demand-supply situation has completely modified in the previous couple of years, and particularly after the March auctions. There are solely three telecom gamers, of which one is financially weak. The operators have sufficient spectrum within the 4G band and by optimising it, can begin offering 5G providers as soon as the ecosystem is extra developed. In actual fact, Bharti Airtel has demonstrated 5G providers by means of such spectrum optimisation. Because of this, if the pricing doesn’t swimsuit the business, will probably be in no hurry to purchase 5G spectrum.

Official sources stated that along with the 5G spectrum in 3300-3600 Mhz band, the division of telecommunications (DoT) will even search pricing for millimeter wave band (24.25 GHz to twenty-eight.5 GHz) and 600 MHz spectrum band, which can be utilized for 5G providers.

“The pricing must be relooked for 5G as the sooner value suggestions got here in 2018 and the public sale will now occur in 2022. Already there have been many developments in the previous couple of years relating to 5G,” an official supply stated. The federal government can also be together with extra bands for 5G, for which value suggestions are required, the supply added.

In 2018, Trai had really helpful a reserve value of Rs 492 crore per Mhz for 3300-3600 MHz band. The value meant that for a pan India minimal block of 20 Mhz, operators must shell out Rs 9,840 crore, which was seen as steep. As telcos want about 100 Mhz to supply pan-India 5G providers, this value implies that they would want to shell out Rs 49,200 crore.

Equally, for 700 MHz band, though Trai had diminished the reserve value by 43% in 2018 in comparison with 2016 auctions, at Rs 6,568 crore per Mhz, for a pan-India 5 Mhz block, nonetheless operators would have needed to shell out Rs 32,840 crore, which was seen as fairly excessive.

Excessive reserve value of spectrum acted as a dampener within the March auctions. For example, of the whole 2,308 Mhz of spectrum placed on public sale which at reserve value was price Rs 3.92 lakh crore, solely 37% of airwaves acquired offered and two bands, 700 Mhz and 2500 Mhz, drew a clean.