In its largest ever spectrum sale, regulator Trai today recommended an auction of 8,293.95 Mhz of telecom frequencies at an estimated total base price of Rs 5.77 lakh crore, which is slightly higher than that for the previous sale.
While the regulator suggested a cut in base prices of key spectrum bands, including 700 Mhz, 800 Mhz and 1800 Mhz, compared to the 2016 auction, it batted for putting on sale an additional 200Mhz of 5G spectrum that has been reserved for ISRO by the telecom department (DoT).
The Department of Telecom in its reference to Trai had informed the regulator about the availability of 8,096.45 Mhz of spectrum across nine bands.
"Entire available spectrum should be put to auction in the forthcoming auction," the Telecom Regulatory Authority of India (Trai) said in its recommendation on the auction of spectrum.
Trai has suggested a steep cut of 43 per cent in the base price at around Rs 6,568 crore per Mhz for the premium 700Mhz band frequencies which failed to attract bidders in the last auction.
For the next-generation services, the watchdog recommended a pan-India base price of Rs 492 crore per megahertz unpaired spectrum for proposed 5G spectrum (3300-3600Mhz). The price is about a third of that set for 2G (1800 MHz) frequencies during the 2012 sale.
The government had fixed a pan-India base price at around Rs 2,800 crore per Mhz for 2G spectrum -- both uplink and downlink, translating into Rs 1,400 crore per Mhz for unpaired spectrum.
The recommendation, if approved by the government, will lead to the country's biggest ever spectrum auction in terms of quantum of frequencies which is more than three-folds the size of radio waves put for sale in 2016 at a cumulative base price of Rs 5.63 lakh crore.
Telecom operators bidding in the next round of auctions for the spectrum to provide next generation of mobile services will have to shell out a minimum of Rs 9,840 crore on pan-India basis to buy spectrum in 3300-3600 Mhz band as Trai has suggested that it "should be put to auction in the block size of 20 MHz".
Trai has recommended to auction additional 200 Mhz of 5G spectrum that DoT has reserved for ISRO on pan-India basis.
The proposed reduction in base prices received a thumbs-up by the telecom industry.
"For now, we are glad that the government has decided to bring down the price of spectrum, especially for the 700 MHz band," Rajan S Mathews, the Director General of industry body COAI, said in a statement.
Based on Trai recommendations submitted to the government, the base prices and timing for the next round of auctions will be finalised.
Trai has recommended the auction of entire spectrum available in various bands barring the specific locations or districts where ISRO is using the 25 MHz (3400 MHz - 3425 MHz) of the spectrum.
The Telecom Regulatory Authority of India (Trai) has suggested a base price of Rs 3,285 per megahertz for paired spectrum in 1800 Mhz band.
For the premium 700 Mhz band, Trai has said that its "reserve price...should be equal to 2 times of reserve price of 1800 MHz spectrum band", resulting in about 43 per cent reduction in the price of this band to Rs 6,568 crore per Mhz for paired spectrum.
In 2016, the government had fixed the base price of 700 Mhz band at Rs 11,485 crore per Mhz, which was around four times the price of 1800 Mhz band. Operators were required to buy radiowaves worth Rs 57,425 crore to provide mobile service in this band.
The cost of providing 2G, 3G and 4G mobile services through 700Mhz band is estimated to be around one-third of that incurred in 1800 Mhz band.
In the previous 2016 auction, a total of 2,354.55 megahertz of mobile airwaves were put for sale but nearly 60 per cent of the radio waves, including premium Rs 4 lakh crore worth spectrum in 700 Mhz band, remained unsold.
If Trai recommendations are approved by the government, then telecom operators in the next round will have shell out a minimum of Rs 32,840 crore for providing services in the 700 Mhz band on pan India basis.
"Until and unless the SUC(spectrum usage charges), licence fees and other levies are lowered as well, the industry may not be able to cope with the requirements for state-of-the-art infrastructure needed for new technologies and early roll-out of 5G," Mathews said.
Trai has recommended base price of Rs 4,651 crore for paired spectrum in 800 Mhz band covering 19 circles, Rs 1,622 crore per Mhz for 900 Mhz band covering seven circles, Rs 3,399 crore per Mhz of in 2100 Mhz covering 21 circles and Rs 821 crore per Mhz in 2500 Mhz band covering 12 circles.
The regulator has recommended Rs 960 crore per Mhz for unpaired spectrum in 2300 Mhz band on a pan-India basis.
To avoid monopolisation of suggested 5G spectrum band, Trai has recommended a limit of 100 MHz per bidder and also "the lock-in period for spectrum in this band for becoming eligible for spectrum trading should be 5 years" instead of 2 years applicable for other bands.
It has suggested no time bound network roll out obligation for buyers of the potential 5G spectrum but for other sets of spectrum norms mentioned in the earlier auction should apply.
The regulator has recommended that spectrum assigned without auction to that have closed their 2G services should be put for auction.
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