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5G Spectrum auction: 5 year lock-in, 43% reduction in 4G reserve price

Seven private telecom operators participated in that 2016’s spectrum auctions. This year, there are only three: the Vodafone–Idea combine, Airtel, and Reliance Jio. The TRAI is proposing that the government sell spectrum in the following bands: 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300–3400 MHz and 3400–3600 MHz. The last two are the 5G bands. The Economic Times reports that telcos are unlikely to show much interest in the auctions, just like in 2016, when only 40% of the spectrum put up for sale was sold. Premium 4G airwaves are also being sold this time around, which could boost existing LTE networks — airwaves below 1000MHz are highly sought-after since they have a distance advantage. The shorter the wavelength, the higher the distance of transmission.

4G Prices cut 43%

Prices have been significantly slashed for premium 4G airwaves — the 700MHz band will be sold at ₹492 crore, which is a 43% reduction, as compared to the 2016 price. There were no auctions in 2017.

TRAI said that it is not making any huge bets about the return on investment that telcos would get out of 5G, considering that even the standards haven’t been finalized yet. In any case, incumbents may very well be more focused on upgrading their existing infrastructure and competing on price, than they are about rolling out expensive 5G technology. TRAI has recommended that all the 300 units of airwaves be put up for the 5G auction.

Telecom providers will be required to hold on to their 5G spectrum — without selling it off — for at least five years. The other airwaves will come with a two-year ‘lock-in’, after which the airwaves can be sold.

Other recommendations

Here are some recommendations from TRAI’s announcement:

  • Block Size: Spectrum in 3300-3600 MHz band should be put to auction in the block size of 20 MHz. To avoid monopolization of this band, there should be a limit of 100 MHz per bidder. Since the TSPs are allowed to trade their partial or complete spectrum holding to another TSP, the limit of 100 MHz spectrum in 3300–3600 MHz band, shall also apply for spectrum trading. In case a TSP acquires more than one block, the entire spectrum should be assigned to it in contiguous form.
  • Spectrum Cap: The revised provisions of spectrum cap, i.e. how much spectrum a telecom operator is allowed to hold, which were 35% Overall cap and a Cap of 50% on the combined spectrum holding in the sub-1 GHz bands, should be extended to 3300-3600 MHz band also. Additionally, in 3300–3600 MHz band, there should be a spectrum holding cap of 100 MHzper licensee
  • Spectrum Audit: There is an urgent need of audit for all allocated spectrum both commercial as well as spectrum allocated to various PSUs/Government organizations. This should be done by an independent agency on a regular basis.
  • Recommended Pricing: The recommended pricing for all 5G spectrum:

Read the full recommendations here

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