5G recommendations: DoT to seek clarifications from Trai

The Department of Telecommunications (DoT) is likely to seek clarifications from the Telecom Regulatory Authority of India (Trai) about its recommendation to charge 1.5 times the reserve price for buying a 5G spectrum for 30 years. Apart from that, clarifications may be sought around rollout obligations and a few other issues.

According to sources, an internal committee of DoT, headed by AK Tiwary (Member Technology), discussed the Trai recommendations on Monday and Tuesday. The DoT is deliberating on the proposals so that the final report can be put up in Digital Communications Commission (DCC), which is an inter-ministerial panel. After DCC approval, the recommendations will be placed before the Cabinet.

As per sources, the DoT committee wants to understand the methodology used to arrive at recommending 1.5 times multiple for the reserve price. The sources further said if the net present value (NPV) formula, where NPV of the spectrum has to be protected, has to be used, the increase should be about 1.1 times (16%) as against 1.5 times (50%). Apart from this, some clarifications may be sought around mandatory rollout obligations for 5G networks.

In its recommendations on April 11, the regulator had reduced the reserve price of spectrum across bands by about 39%. But the regulator had given the price of spectrum for 20 years as has been the practice in the earlier auctions. But since in the upcoming auction, the spectrum will be given for 30 years, Trai had said the reserve price would be 1.5 times the 20-year period. For perspective, with a 36% cut in reserve price of 5G spectrum in the 3,300-3,670 MHz at Rs 317 per Mhz, operators can buy 100 Mhz for Rs 31,700 crore as against the 2018 price of Rs 49,200 crore. But getting the spectrum for 30 years, operators have to pay Rs 47,550 crore, which is not much lower than the earlier price.

The telecom industry has expressed disappointment around the cut in reserve price. The industry wants the prices should be lowered further as despite the cut; the rates are still the highest in the world.

The 5G auction is quite crucial this time as the government wants to roll out the services by August 15. In the March 2021 auctions, operators bought 855.60 Mhz spectrum worth Rs 77,814.80 crore, out of the total 2,308 Mhz of spectrum put up for sale at a reserve price of Rs 3.92 trillion. This means, that only 37% of airwaves got sold and two bands, 700 Mhz and 2,500 Mhz, drew a blank.

Similarly, in the 2016 auctions, the government had mopped up a total amount of Rs 65,789 crore – 4% over the reserve price. This was also seen as a lukewarm response as only 965 MHz spectrum got sold against a total of 2,353 MHz put up on sale, meaning that only 40% got sold.