Trai likely to propose putting up higher amount of spectrum for auction than last year

NEW DELHI: The telecom regulator is likely to propose putting up a higher amount of spectrum for auction than last year, including those in the 700 MHz band used for 4G services, which may lead to the biggest ever sale of airwaves in the country. The Telecom Regulatory Authority of India ( Trai) could suggest rational pricing for these airwaves to stimulate the auction, a senior official said, asking not to be identified. The telecom department is examining how much spectrum can be auctioned, the official added, indicating there could be a difference between what the regulator suggests and the quantum ultimately put on sale.
However, the regulator may recommend that the department put out as much harmonised spectrum as possible, the official said. Harmonisation refers to making spectrum in any band contiguous, thus increasing efficiency without added costs. “By the end of this month, we’re hoping to come out with recommendations on spectrum pricing,” Trai chairman RS Sharma said Thursday.

Last year, DoT had put up 470.75 MHz of spectrum for auction in March, which fetched Rs 1.1lakh crore, with unsold airwaves left in some bands.

Trai issued a consultation paper on pricing of spectrum across bands – 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz – in November last year. The regulator had also asked for views on the starting price of airwaves in the coveted 700 MHz band, which may be auctioincludes ned for the first time, although industry is debating whether this is the right time to put up this bandwidth for sale.

While financially stretched telcos have publicly said that the 700 MHz band should be auctioned two years from now when the 4G ecosystem has developed, equipment makers such as Ericsson have backed the regulator’s move as ‘timely.’

If Trai’s suggestion to include 700 MHz in the upcoming auctions is accepted by the telecom department, it will clear the decks for the biggest ever spectrum sale, which in turn will be a boon for the government. Since the new spectrum rules permit the 800 MHz, 1800 MHz and 900 MHz bands to be used to offer any telecom service with any technology, a larger quantum of airwaves becomes more lucrative to acquire, again benefitting the government. Additionally, the government will sell spectrum which it is likely to free from the defence sector.

“The government should first give a clear timeline of auctions for the next two-tothree years, including visibility on availability of spectrum bands, reserve prices and intervals, such that the industry can make their spectrum and technology bets with more clarity,” said Prashant Singhal, global telecommunications leader at EY. The government had pegged revenue from communication services for the current financial year at Rs 42,865 crore, which includes upfront realisation from the sale of spectrum and licence fees. However, chances of the spectrum auction going through in the current financial year look slim.

Reliance Communications is among the operators whose airwaves are set to expire in 2017. The Anil Ambani-owned company’s permit in Gujarat, where it holds 800 MHz and 1800 MHz airwaves, expires in March 2017. It has insured itself against not winning back spectrum in the 800 MHz band by buying similar airwaves in the March 2015 sale.

Three permits of Tata Teleservices — in Andhra Pradesh, Maharashtra and Gujarat where the telco also holds 800 MHz and 1800 MHz bands — will expire in late 2017. In the March 2015 auction, Tata Tele bought some airwaves in Andhra Pradesh and Maharashtra, but not in Gujarat.

The permits of state-run Mahanagar Telephone Nigam’s spectrum across 800 MHz, 900 MHz and 1800 MHz in Delhi and Mumbai will be up for renewal in October 2017. However, it is unclear if the government will put MTNL’s bandwidth up for sale or extend its licences at market price, a regular practice for state-run telecom operators.