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TRAI’s reserve price for spectrum auctions could mean more 4G or none

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The Telecom Regulatory Authority of India (TRAI) has recommended (pdf) a reserve price of Rs 11,485 crore per MHz for pan India airwaves for the next round of auctions. This includes the base spectrum pricing for 7 bands, including the 700 MHz spectrum which is being offered for the first time and supposedly offers high quality mobile broadband and 4G.

The TRAI’s recommendation will go to the Telecom Commission and then the Cabinet for final approval, following which the auctions will take place. The report states that this is the highest reserve price fixed for a band since the auctions began in 2011, and could fetch the government Rs 5.36 lakh crore if frequency is sold at Rs 11,485 crore per MHz. The 700 MHz band spectrum could independently cost Rs 4 lakh crore at the same price. (Devices compatible with 700 MHz A block spectrum)

The TRAI is of the view that the telecom industry needs more spectrum to address call drops, as well the spectrum crunch.


Also read:
– Telcos could sink with Trai planning Rs 4.6 trillion auction
– Telcos say 700 MHz spectrum price exorbitant

However, telecom operators in India had a gross revenue of Rs 2.54 lakh crore in financial year 2014-15, and are prompting questions over the current reserve price recommended by the TRAI. Last year’s spectrum auction got the government bids worth Rs 1.1 lakh crore, and telcos had requested the TRAI to defer the sale of the 700 MHz spectrum, stating that the ecosystem for this band had not yet developed, and the sale would mean underutilisation for several years and block funds. The auction sold spectrum across 800 MHz, 900 MHz, 1,800 MHz and 2,100 MHz bands. (Related read here)

TRAI suggests a base price of Rs 2,873 crore per MHz for the 1800 MHz frequency band (2G spectrum), which is 31% higher than base price the government fixed in the 2015 auction. The bid could fetch Rs 2,492 crore since only 21 MHz quantum of spectrum is available for auction.

Also read: No plausible reason to revise spectrum cap: TRAI

TRAI suggests a pan India base price of Rs 3,476 crore for 3G spectrum in the 2100 band, which could attract bids of about Rs 63,000 crore. It added that an additional 201 MHz of spectrum (in 1800 MHz band) could be attained for commercial purpose if the defence ministry shifts to the designated defence band, and its assignment is restricted to 20 MHz maximum.

India’s 2015 spectrum auction across 800 MHz, 900 MHz, 1800 MHz and 2100 MHz bands concluded after 19 days and 115 rounds of bidding. The Indian government managed to raise Rs 1,09,874 crore from the sale of 418.05 MHz of spectrum. The top five circles – Maharashtra, Andhra Pradesh, Rajasthan, Gujarat and Karnataka – accounted for 52% of the bids.

Also read: India’s 2015 Spectrum Auction results: What the telecom operators are saying

Image Credit: Armando Alves under CC BY 2.0

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