The Telecom Regulatory Authority of India (Trai) has rejected the demand for lowering the reserve prices of spectrum to be auctioned later this year by the Department of Telecommunication’s (DoT). It said that no one can guarantee that all airwaves put on sale will be sold.
The telecom regulator in fact put the onus of success of the auctions on DoT, saying that the government’s own marketing efforts will have a bearing on the sale’s success. The regulator was responding to DoT’s reference which sought a relook at reserve prices of spectrum in upcoming auctions, and making available all airwaves for sale to maximise government revenue, besides relooking at the entire spectrum sale architecture.
“The authority reiterates the spectrum valuation and reserve prices as contained in its recommendations dated 1st August 2018,” the regulator said in its response to the DoT Monday, adding that it had considered all developments necessary before making its recommendations back in August 2018.
On the DoT’s view that Trai’s recommendations should be reconsidered to ensure all spectrum is sold, the regulator said, “The Government’s own marketing efforts will also have an impact on participation in auction. Therefore, no guarantee can be given about sale of all the spectrum put to auction, as it depends on various factors”.
Trai further said that pan-India auction of a spectrum block isn’t possible and refused to relook at the entire architecture of auctioning spectrum, saying that it will need a separate reference from DoT for the exercise, as it felt that issues around type of auction, eligibility conditions for participation on auction, payment terms, consultation with finance ministry or RBI and validity of spectrum, were “already settled.”
Disappointed with the Trai’s response, India’s mobile phone companies said that the regulator should have taken into account the industry’s financial stress and results of global auctions. Talking to ET, Rajan Mathews, director general of Cellular Operators Association of India (COAI), added, “The DCC (Digital Communications Commission) and the inter-ministerial cabinet group have the option of reviewing and reducing the reserved prices like they did before.”
COAI represents India’s private telcos Vodafone Idea, Bharti Airtel and Reliance Jio.
“If the government wants operators to focus on socially enhancing application then there is a commensurate need to price spectrum accordingly,” Mathews said.
The regulator, however, agreed with DoT on two counts. One, that the lock-in period for trading spectrum in 5Gband be reduced to two years from five years, so as to encourage larger participation of prospective bidders and to facilitate early deployment of 5G in India. Second, that existing carriers can bid for a minimum of 0.2 Mhz, instead of 0.6 Mhz, in the 900 MHz and 1800 MHz bands.
But Trai rejected DoT’s views that spectrum cap in 5G bands – 3300 to 3600 Mhz – should be lower than 100 Mhz, on the grounds that the limit was made to keep a single bidder from bidding for the entire spectrum, and thus leading to monopolisation. It further added that the limit still complied with the 35%, the overall cap taking into account all spectrum put to auction thus far.
DoT, in its reference back to Trai for the second time, had wanted the cap to be 33% of available spectrum, which is 275 Mhz after removing 25 Mhz in case ISROs demand to reserve that spectrum for their use was granted.
Trai has however reiterated that ISRO should not be given the 25 MHz on pan-India basis as it would lead to underutilization of this spectrum. In case DoT does decide in favour, then the block size in 5G band be lowered to 5 Mhz instead of 20 Mhz, to ensure proper utilisation. It however recommended that the 25 MHz can be given for captive industrial use, for which a separate reference will have to be made by DoT to the regulator.
The regulator’s responses will have to be taken up by the Digital Communications Commission (DCC), for taking a final call. The government wants to hold spectrum auctions before the end of this year.
In its reference, the DoT had asked the regulator to review the entire architecture of auctions, and asked Trai to look at reserve prices, participation, possibility of greater competition, Digital India and meeting policy objectives. Further, DoT asked the Trai to keep in mind realities of intense consolidation which has led to freeing up of more airwaves, spectrum harmonisation and sough prices of all airwaves coming up for renewal in 2021.