Trai suggests Rs 492 crore per Mhz for 5G spectrum

New Delhi: Telecom regulator Trai on Wednesday recommended pan India base price of Rs 492 crore per megahertz for 5G radiowaves, and lowered the base price of frequencies that remained unsold in the 2016 auctions.

The price suggested for 5G spectrum is about a third of the 1800 MHz band in 2012. Known as the 2G spectrum at that time, the government had fixed base price at around Rs 2,800 crore per Mhz on pan-India basis for paired spectrum (equal chunk of frequency for uplink and downlink) in the 1800 Mhz band.

Trai has recommended that proposed based price of proposed 5G spectrum in 3300-3600 Mhz band "should be equal to 30 per cent of the reserve price of 1800 MHz FDD band" at about Rs 492 crore per Mhz unpaired spectrum on pan India basis.

Telecom operators bidding in the next round of auctions for the spectrum to provide next generation of mobile services will have to shell out a minimum of Rs 9,840 crore on pan-India basis to buy spectrum in 3300-3600 Mhz band as Trai has suggested that it "should be put to auction in the block size of 20 MHz".

Based on these recommendations submitted to the government, the base prices and timing for the next round of auctions will be finalised. It has recommended auction of entire spectrum available in various bands barring the specific locations or districts where ISRO is using the 25 MHz (3400 MHz - 3425 MHz) of spectrum.

The Telecom Regulatory Authority of India (Trai) has suggested base price of Rs 3,285 per megahertz for paired spectrum in 1800 Mhz band. For the premium 700 Mhz band, Trai has said that its "reserve price...should be equal to 2 times of reserve price of 1800 MHz spectrum band", resulting in about 43 per cent reduction in price of this band to Rs 6,568 crore per Mhz for paired spectrum.

In 2016, government had fixed the base price of 700 Mhz band at Rs 11,485 crore per Mhz, which was around 4 times the price of 1800 Mhz band. Operators were required to buy radiowaves worth Rs 57,425 crore to provide mobile service in this band. The cost of providing mobile services in 2G, 3G and 4G technology is estimated to be around a-third of service provisioning in 1800 Mhz band.

About Rs 4 lakh crore of 700 Mhz spectrum was put for auction but there were no takers for this band due to its high price. If Trai recommendations are approved by government, then telecom operators in the next round will have shell out a minimum of Rs 32,840 crore for providing services in the 700 Mhz band on pan India basis.

The regulator has suggested using higher of the two figures – 80 per cent of the average valuation of spectrum band in the licensed service area or the price realised in the October 2016 auction for calculating base price of radiowaves in 800 Mhz, 900 Mhz, 1800 Mhz and 2100 Mhz bands.

Trai has recommended base price of Rs 4,651 crore for paired spectrum in 800 Mhz band covering 19 circles, Rs 1,622 crore per Mhz for 900 Mhz band covering seven circles, Rs 3,399 crore per Mhz of in 2100 Mhz covering 21 circles and Rs 821 crore per Mhz in 2500 Mhz band covering 12 circles.

The regulator has recommended Rs 960 crore per Mhz for unpaired spectrum in 2300 Mhz band on pan-India basis. While all the spectrum at present can be used for 4G and 5G, experts have suggested use of higher frequency bands like 3300-3600 Mhz for 5G services.

To avoid monopolisation of suggested 5G spectrum band, Trai has recommended a limit of 100 MHz per bidder and also "the lock-in period for spectrum in this band for becoming eligible for spectrum trading should be 5 years" instead of 2 years applicable for other bands. It has suggested no time bound network roll out obligation for buyers of the potential 5G spectrum.

Trai has recommended that telecom operators buying spectrum 700 Mhz, 800 Mhz, 900 Mhz and 1800 Mhz need to roll out network across 60 per cent of district head quarters (DHQs) or town by end of three years and 30 per cent of block head quarters by end of 5 years from the effective date of licence or the date of assignment of spectrum won in the auction process.

Successful bidders of 2100 Mhz band, earlier known as 3G spectrum, will have to roll out network in 70 per cent of DHQ by end of 5 years, according to the recommendation. The regulator has recommended that in case a company has closed 2G GSM or CDMA services, it cannot hold the administratively (without auction) assigned spectrum for which it has not paid the market determined price.

"Any such spectrum lying with TSPs (telecom service providers) should be taken back and put to auction in the forthcoming auction," Trai said. Its has reiterated need for urgent audit of all allocated spectrum -- commercial as well as the one given to various public sector units and government organizations through an independent agency on a regular basis.