Trai likely to cut backhaul spectrum fee by 50% to ease telcos' cost burden

The Telecom Regulatory Authority of India (Trai) is likely to slash backhaul spectrum pricing by as much as 50%, according to people familiar with the matter, a move that would ease the financial burden of telecom operators and allow them to save a few hundred crores annually. Telcos currently pay 0.15-3.95% of their adjusted gross revenue (AGR) as charges for utilising backhaul airwaves. The rate varies depending on the number of backhaul carriers used.

Backhaul spectrum, or the radio frequency used by telecom firms to connect cell towers, is given administratively by the government. Under the current methodology, the charge for the airwaves escalates based on the number of carriers a telco has and is calculated as a percentage of AGR by applying a weighted average formula. The telecom industry currently pays about Rs 4,000 crore annually for utilising backhaul spectrum, according to industry executives.

“Trai’s recommendations are expected in the coming days,” an official told ET on condition of anonymity. “The Department of Telecommunications (DoT) will take a final call on the issue after analysing the proposals.” During consultations, the telcos sought a flat and low rate for using backhaul spectrum. They stressed that the pricing of the airwaves was fixed when access or mobile spectrum was provided administratively. However, currently, carriers acquire access spectrum through competitive auctions and, therefore, backhaul spectrum pricing requires substantial rationalisation.

Backhaul spectrum consists of microwave access (MWA) and microwave backbone (MWB) frequencies. Officials told ET that Trai is considering reducing prices for MWA carriers by around 50%, while fixing a low flat rate for MWB carriers. Cheaper backhaul spectrum would benefit not only telcos but also end users, the industry feels.

Change in Method

Telcos feel it allows for equitable access to telecom services. Frequencies in the 7/13/15/18/21 GHz bands are among those used as backhaul spectrum. Further, the E band (71-76 GHz and 81-86 GHz) is primarily used for 5G backhaul. The usage of V band spectrum (57-64 GHz and 64-71 GHz) has not become prevalent so far.

After the 5G spectrum auction in 2022, airwaves in the E band were given provisionally to telecom firms on an administrative basis for 5G backhaul. While both the regulator and the DoT were open to auctioning backhaul spectrum earlier, the notification of the new Telecommunications Act changed the scenario. According to the Act, backhaul spectrum has to be given administratively. Therefore, the regulator will now deliberate pricing accordingly.