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Telecom operators may be able to buy spectrum for 20 years instead of 30

The government had announced in September last year that henceforth, spectrum after auctions would be given on a 30-year lease.

Telecom-industry
E-Band spectrum has the potential to provide high-speed broadband services, especially in remote areas and also better in-building coverage.

Telecom operators may be able to buy spectrum for 20 years in the upcoming auction as the Digital Communications Commission (DCC) on Friday decided to offer such an option.

The government had announced in September last year that henceforth, spectrum after auctions would be given on a 30-year lease. A standing committee of the department of telecommunications (DoT), however, proposed that telecom firms be given the option to buy spectrum for 20 years as getting the airwaves for 30 years is turning out to be expensive. The Telecom Regulatory Authority of India (Trai) has recommended that the reserve price for the 30-year period would be 1.5 times that the 20-year period.

The DCC said the price cut suggested by Trai requires no further downward revision. Since operators have been raising concerns about affordability, the spectrum tenure has been kept at 20 years.

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 to get the spectrum for 30 years, operators have to pay Rs 47,550 crore, which is not much lower than the earlier price.

The DCC, which is the highest decision-making body of the DoT, has also decided not to auction 27.5 to 28.5 GHz spectrum in the millimeter band. The spectrum can be given to satellite firms. Also, 400 MHz in the millimeter band will be reserved for state-run BSNL while in mid-band, a slot of 40 MHz will be given to BSNL. Since the quantum of spectrum has been reduced in the bands, the DoT will seek a clarification from Trai around the reserve price and whether there is a need for revision.

The DCC has also decided to auction spectrum in both E and V bands, based on a report of DoT’s standing committee. A reference will be sent to Trai to give the reserve price for the spectrum bands. But as 5G services are to be launched from August 15, DoT will provisionally allocate E-band spectrum to telecom operators for 5G services with an undertaking that whenever the auction takes place, the firms will have to pay the market-determined price.

Earlier, DoT was considering allocating E-band spectrum administratively to all the companies, but there was opposition from telecom firms, primarily Reliance Jio, which has been insisting on auction for all available spectrum. E-Band spectrum has the potential to provide high-speed broadband services, especially in remote areas and also better in-building coverage.

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