Telecom dept to auction spectrum in E & V bands; TRAI to recommend reserve price

Telcos, however, will have to give an undertaking that whenever the auction for this band happens, they will pay the market-determined price for it.

mobile spectrum auction
The DoT feels that with right pricing, it will be better for telecom operators to buy the spectrum in auction.

The Department of Telecommunications (DoT) has decided to auction spectrum in the E and V bands, which have the potential to provide high-speed broadband services especially in remote areas and for better in-building coverage. It will shortly send a reference to the Telecom Regulatory Authority of India (Trai) to seek stakeholders’ comments to finalise pricing and other allocation methodologies to telecom operators and technology firms.

However, since 5G auctions are scheduled to start from July 26, the DoT has decided to provisionally allocate the E-band spectrum to telecom operators to aid the launch of 5G services. Telcos, however, will have to give an undertaking that whenever the auction for this band happens, they will pay the market-determined price for it. Earlier, the DoT was considering the option to allocate the E-band spectrum administratively to all the companies, but there was opposition from telecom firms, particularly Reliance Jio, which demanded that all the spectrum be auctioned.

Though the Trai in 2014 had recommended a light-touch licensing approach and no auction for the bands, the DoT now feels that the situation has changed over the past six-seven years. “In 2014, the use cases of E and V bands would have been different but now operators will primarily use it as a backhaul for 5G services and for that the option to allocate spectrum on a link-to-link basis may not be cost-effective, given the requirement for putting up large number of sites,” a DoT official said. The DoT feels that with right pricing, it will be better for telecom operators to buy the spectrum in auction.

In its 2014 recommendations, Trai had said that both the E and V bands should be opened with ‘light-touch regulation’ and allotment should be on a ‘link to link basis’. It had further said that the E band carrier should be charged at `10,000 per annum per carrier of 250 MHz and that there should be an initial promotional discount of 50% for three years from the date of allocation of the first carrier in this band. In case of the V band carriers, it had said the charges should be `1,000 per annum per carrier of 50 MHz each. Trai had also said that prices would be reviewed after five years based on deployment and usage.

The argument by certain players against the auction of these bands was primarily based on the fact that there’s not much the government is going to get by doing so unlike access spectrum. The value of a spectrum band depends upon various factors, like ecosystem, but the most important factor is its propagation characteristics. The lower frequency spectrum is more valuable compared with the higher frequency as the radio waves riding on the former travels farther, thereby requiring fewer base stations, which means less operational costs.

The value of E and V band spectrum is low because they have very poor propagation characteristics. These bands are like fibre and can be used for broadband services but not for direct mobile connectivity.

According to some analysts, the telecom operators are opposed to the move to delicense the E and V bands as they fear that technology companies may enter into the broadband market and use the delicensed spectrum, which would come free of cost, to provide services to consumers. This may lead to a non-level playing field as telecom operators have spent billions of rupees in acquiring access spectrum to offer the same kind of services. Companies like Microsoft, Google, Facebook, etc, have in the past shown their intent to provide broadband using delicensed spectrum.

The spectrum in the E (71-76 GHz and 81-86 GHz) and V (57-64 GHz) bands has the potential to provide high-speed broadband services, especially in rural and remote areas. The E band can be used by mobile operators as a backhaul where fibre is not available.

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