Despite the telecom industry’s fears about high reserve prices, the government wants to hold auctions for the high-speed airwaves by June. 5G would be available in India by August-September this year.
After receiving recommendations from regulator TRAI on spectrum reserve pricing and the amount of airwaves to be auctioned, communications minister Ashwini Vaishnaw said that the Department of Transportation is proceeding with the 5G auctions following previously established schedules. “We are on track to execute auctions according to our schedule.”
The high-powered Digital Communications Commission (DCC) will now look at Trai’s proposals, after which they will be submitted back to the regulator for further assessment. The Cabinet will review the situation before the auctions begin when they return.
Trai suggested a 40% reduction in minimum bid prices to address the industry’s concerns about spectrum costs compared to prior auctions. However, telecom sector leaders, notably Airtel CEO Sunil Mittal, claim that pricing is still too high and that Trai’s decision has disappointed them “.
According to Vaishnaw, India’s average revenue per user (ARPU) – a crucial indicator for measuring telecom firms’ profitability – is one of the lowest globally, at roughly $2, compared to $20-40 in many other nations. According to the minister, companies need financial power to make large investments and increase service quality.
The minister said that he continues to anticipate competitive bidding and a package from industry participants that received a massive financial rescue package from the government in September of last year. Reliance Jio, Bharti Airtel, and Vodafone are just a few examples.
Digital Communications Commission to discuss TRAI’s suggestions
On Friday, the Digital Communications Commission (DCC) will review the Telecom Regulatory Authority of India (Trai) recommendations on the 5G spectrum auction.
According to sources, the Department of Telecommunications (DoT) has approved most of the Trai recommendations, including the one concerning the reserve price. However, since the regulator has recommended charging 1.5 times the reserve price for purchasing spectrum for 30 years, the committee has advocated allowing telcos to acquire spectrum for 20 years instead.
The government increased the spectrum term from 20 to 30 years due to the telecom reforms unveiled last year. The DCC must make the ultimate decision about spectrum tenure.
The commission will also decide whether or not the millimetre band spectrum between 27.5 and 28.5 GHz should be auctioned. Satellite companies have been clamouring for this spectrum; a desire backed up by Bharti Airtel. However, Vodafone Idea and Reliance Jio want to sell the whole millimetre band. Satellite companies and cell providers might coexist in the band, according to Trai.
Trai cut the reserve price of spectrum across bands by nearly 39% in its April 11 recommendations. However, it had set the spectrum price for 20 years, as had been the case in previous auctions. However, since the spectrum in the future auction would be 30 years, Trai previously said that the reserve price would be 1.5 times the 20-year term. For example, with a 36% reduction in the reserve price of the 5G spectrum in the 3,300-3,670 MHz band to Rs 317 per MHz, operators may purchase 100 MHz for Rs 31,700 crore, down from Rs 49,200 crore in 2018. However, operators must pay Rs 47,550 crore for a 30-year license, which is less than the previous fee.
The industry is disappointed and wants the costs to be reduced even more since the rates are still the highest after the reduction.
The government plans to roll out the services by August 15. Thus the 5G auction is critical this time. Operators purchased 855.60 MHz spectrum worth Rs 77,814.80 crore in the March 2021 auctions, out of 2,308 MHz put up for sale at a reserve price of Rs 3.92 trillion. This implies that just 37% of airways were sold, and two bands, 700 MHz and 2,500 MHz were left empty.
Vaishnaw claims that the tender invitation notifications have already been drawn up.
Vaishnaw gave two key pieces of information on the state of 5G spectrum auctions: the present status of approval/feedback on TRAI’s recommendations and that his ministry has already completed drafting up a draft invitation for 5G tenders.
The Digital Communications Commission (DCC), which is part of the Department of Telecommunications, will decide on TRAI’s proposals in the next 5-6 days, according to Vaishnaw. A call will be reported to TRAI after it has been answered.
Vaishnaw went on to say that his ministry would take the industry’s requests for lower 5G spectrum costs into consideration in a “logical and methodical” way.
Regardless of the result, this indicates that we are on the verge of deciding on 5G spectrum costs and that auctions might take place as early as June this year.
The government may lower the basic price of the 5G spectrum even more.
Compared to the previously set pricing, TRAI has proposed a price reduction of about 39%. However, the industry has voiced dissatisfaction with the sector regulator’s recommendations on 5G spectrum pricing, claiming that the tariffs remain the highest globally. According to the Cellular Operator Association of India, which represents all three telecom carriers — Reliance Jio, Vodafone Idea, and Bharti Airtel — TRAI has only proposed a 35-40% price decrease, as opposed to their proposal for a 90 per cent price cut.
The minister said that the Department of Telecommunications was working according to plan and that the auction would take place in early June. The Digital Communications Commission will decide on the proposals, according to the minister, and will approach them for an explanation.
Jio, Airtel Among the Top 5G Service Providers
Airtel and Jio seem to be the first carriers to provide 5G services in a limited number of locations. Both companies have conducted several tests, boasting about their great internet speeds. While Airtel has reported internet speeds of up to 1Gbps, Jio claims to have achieved 412Mbps during pilot testing.
In addition, the Department of Telecommunication (DoT) has announced that 5G services will be available in 13 Indian cities by 2022. The first 5G services would be accessible in Delhi, Gurugram, Bengaluru, Kolkata, Chandigarh, Jamnagar, Ahmedabad, Chennai, Hyderabad, Lucknow, Pune, and Gandhi Nagar, according to the government.
On the other hand, smartphone makers have already begun to flood the market with 5G-capable devices, which will undoubtedly accelerate 5G adoption.