The Department of Telecommunication (DoT) has written to the Defence Ministry for releasing 15 MHz of spectrum in the 2100MHz band held by the Defence sector to put it up for upcoming auctions, reports Economic Times. The DoT has proposed to surrender its 15MHz of spectrum in the 1900MHz band for acquiring the 2100MHz band held by the Defence Ministry.
The request from DoT comes as a part of the spectrum harmonization process across all 3G and LTE bands. It is looking to put up 200MHz of spectrum, freed from Defence under the harmonization process, before the upcoming spectrum auctions. Last year, the Union cabinet had given its nod for spectrum swapping between Defence and Telecom authorities, prior to 2015 spectrum auctions.
In January, the TRAI said 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. Earlier in 2014, defence ministry had released 4 blocks of 5 MHz each in the 2100 MHz band out of the 5 blocks of 5 MHz allotted to DoT under an MoU with Defence, prior to 2015 spectrum auctions.
DoT against relaxed payments for telcos: A DoT official told ET that it is likely to support the alternative payment structure for upcoming auctions, which the TRAI had proposed in a recommendation paper last week. TRAI proposed that telcos could first pay 10% of the bid amount; the balance 90% could be paid over 18 years with 18 equal annual installments, along with interest.
TRAI’s high reserve prices: TRAI’s recommendation paper came after the DoT questioned it last month regarding the recommendation of Rs 11,485 crore per MHz for pan India airwaves for the next round of auctions, especially for the newly announced 700 Mhz band which is crucial to 4G adoption in the country. TRAI also recommended 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.
700 MHz spectrum could have few takers: Last month, brokerage firm Credit Suisse (CS) estimated that the government is likely to budget a $25 billion spectrum sale from the upcoming auctions (2016), out of which approximately 30% of value of spectrum is expected to be sold at TRAI’s reserve prices. CS further explains that the 700 MHz spectrum will see only a partial success, as TRAI’s recommended price of Rs 11,485 crore for the 700MHz band is 25% higher than CS’s estimates.
In February, Gopal Vittal, Airtel India CEO had said that the pricing for 700 Mhz was too expensive. “We believe that the price that has been set or proposed for 700 MHz just makes it very, very expensive for us to buy any of that spectrum, so we believe we cannot afford to buy that spectrum at that price,” he said.
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