Telecom regulator Trai today suggested Rs 11,485 crore per Mhz pan-India base price for premium 700 Mhz spectrum- the highest rate for any telecom frequency band- for the next round of auction even as leading operators have sought holding back sale of the radiowaves in this band.
The telecom regulator for the first time has suggested the base price for 700 MHz which is considered as the most efficient frequencies for high-end mobile services.
The regulator in its recommendations on spectrum price for seven bands, including 700 Mhz and 800 Mhz, released today suggested a base price of Rs 2,873 crore per MHz for pan-India 1800 MHz frequency band – widely known as 2G spectrum.
The suggested price of 1800 MHz band is about 31 per cent higher than the base price fixed by the government in March 2015 auction.
The next round of auction is expected to be held in May-June this year.
As per Trai’s paper, the cost of delivering mobile services in 700 Mhz band is approximately 70 per cent lower than 2100 Mhz band, which is widely used for 3G services.
Leading operators had requested the regulator to defer sale of 700 MHz spectrum, saying that ecosystem for providing services in this band was not developed and sale would lead to under utilisation of the spectrum for several years and block industry’s crucial fund.
The telecom regulator, which had mooted an idea of removing band-wise spectrum holding limits in its draft paper, however, suggested no change in existing rules.
The regulator also recommended auction of all 3G spectrum available with the government at a marginally high rate of Rs 3,746 per Mhz pan-India against Rs 3,705 crore per MHz fixed by government for the same in March 2015 auction.
It also recommended auction of 800 Mhz band, widely in demand for 4G services, at a base price of Rs 5,829 per Mhz. The new price is about 60 per cent higher from base price of Rs 3646 crore fixed in last auctions. Trai has suggested auction of 800 Mhz in 19 out of 22 telecom cirlces.
Earlier, the government had fixed the highest base price at Rs 3,980 per MHz for 900 spectrum band in last auction.
The government had fixed Rs 2,191 crore pan-India (excluding Maharashtra and West Bengal) price for 1800 MHz band in previous auction held in March 2015.
As per the recommendation paper, airwaves in 1800 band were available only in seven out of 22 telecom circles. Of the seven circles, it recommended government not to auction spectrum in Bihar, Rajasthan and North-East due to partial availability of airwaves.
Trai also recommended auction of spectrum in 900 Mhz in six service area – Gujarat at base price of Rs 673 crore per Mhz, Karnataka for Rs 558 per Mhz, Haryana for Rs 151 per Mhz, UP East for Rs 776 per Mhz, UP West for Rs 739 Mhz and Bihar for Rs 444 per Mhz.
The regulator has recommended to take back 1800 MHz band spectrum assigned to Aircel in Haryana and Madhya Pradesh and Tata Teleservices in Himachal Pradesh as well as 800 MHz band spectrum assigned to Tata in West Bengal and Quadrant (Videocon) in Punjab and put these frequencies on auction.
The regulator also suggested base price for 2300 Mhz and 2500 Mhz band. It recommended Rs 817 crore per Mhz for spectrum in both 2300 Mhz and 2500 Mhz band, about 33 per cent higher than base price fixed for their last auction held in 2010.
Reliance Jio in the only player to have 2300 Mhz spectrum across India at present.
The regulator in the consultation paper showed that right to use spectrum of state-run MTNL is also expiring in 2016 but the Department of Telecom later informed it that it will expire in 2019. Hence, it did not recommend auction of spectrum held by MTNL.
Trai also did not recommend price of 800 Mhz in Assam, North East and Jammu and Kashmir service area.
Though Trai had mooted removing band-wise spectrum limit in draft paper, it stuck to existing rules.
“The Authority recommends that existing provision of a cap of 25 per cent of the ‘total spectrum assigned’ in 700/800/900/1800/ 2100/2300/2500 MHz bands and 50 per cent within a given band in each of the access service area shall apply for total spectrum holding by each telecom service provider,” the regulator said.
On spectrum held by the Defence, Trai said that if Defence shifts to the designated Defence Band and its assignment in all the circle is restricted to maximum 20 MHz, around 201 MHz additional spectrum can be made available for commercial purpose.
The Ministries of Telecom and Defence are currently working to harmonise spectrum which will free huge chunk of airwaves for commercial use.
“..the Authority recommends that DoT, in coordination with Defence and the TSPs, should complete the harmonization process in the 1800 MHz band before upcoming auctions so that the entire spectrum that is made available due to this exercise is placed for bidding,” Trai said.
To increase supply of spectrum in the market, the regulator has recommended that the entire available spectrum in 2100 MHz band, including spectrum taken back from STel should be put to auction.
STel 2G permits were cancelled in 2012 by The Supreme Court but its holding in 3G band, in Bihar, Orissa and Himachal Pradesh, remained unaffected by the order. The company later closed its operations in India and the regulator said that its 3G spectrum can now be put for auction.