Government readies for next round of spectrum sale, asks Trai to suggest price for 5G airwaves
origin : ETTelecom
Date : 2017-04-21
Views : 0
NEW DELHI:The government has set the ball rolling for the next round of spectrum auctions, asking the telecom regulator to suggest the starting price for 5G airwaves, which could make their debut in the next sale, as well as 4G bandwidth. Also up for sale again would be the coveted 700 MHz band, which remained unsold in the last auction due to its high base price. The telecom department has written to the Telecom Regulatory Authority of India (Trai) to set the reserve price for airwaves in the 4G bands of 700 MHz, 800 MHz, 1800 MHz, 2300 MHz and 2500 MHz, and for spectrum in the 3400 MHz to 3600 MHz bands that are used for 5G services, a senior government official told ET, asking not to be named. “They have asked for the reserve price, band size and the quantum of spectrum, since some of the spectrum in the above-3400 GHz is being used by space (department),” the official said. Fifth-generation (5G) airwaves are expected to be used for a host of services, such as machine-to-machine communication, Internet of Things and even connected smart cities, say analysts. The impending sale is likely to include spectrum that remained unsold in the 2016 auction, including the pricey 700 MHz band. There is however no clarity on when the government will hold the next sale. Former telecom secretary JS Deepak had backed annual auctions, but telecom minister Manoj Sinha had said no decision had been taken on the timing while noting that telcos had surplus airwaves after the last auctions. Telecom companies and analysts say there is no appetite at present for fresh spectrum as the industry, laden with nearly Rs 4.90 lakh crore of debt and in the midst of a bruising rate war, is in no financial position to bid for expensive airwaves. One telco had even asked the telecom department to defer payments for spectrum bought in the 2013 auctions, citing massive cash crunch, as incumbents reel under the impact of a rate war triggered by the free voice and data services offered by newcomer Reliance Jio Infocomm. Also, all major telecom companies, including Bharti Airtel, Reliance Jio Infocomm, Vodafone India and Idea Cellular, had tanked up on the required airwaves in last October’s spectrum sale, analysts say. Leapfrogging to 5G Technology The Cellular Operators Association of India has suggested that auctions be held in 2018, which will give the industry time to settle down amid rapid consolidation. The lobby group said demand for data and smartphones should also be taken into consideration before deciding on the next sale. Jaideep Ghosh, partner at KPMG India, said the government may be looking to leapfrog to 5G technology, given that it was behind the curve on 4G. But “it seems financially unviable for telcos to bid for airwaves in 700 MHz and 5G bands this year,” he added. The global telecom industry expects largescale 5G trials and deployments to start as early as 2019, a year earlier than previously expected. South Korean carrier KT Corp would be the first to launch 5G services, during the Winter Olympics in 2018. The Federal Communications Commission has laid the groundwork for launch of 5G technology in the US by 2020. Consultations Soon Trai is expected to shortly begin consultations, which will be the first step in a longdrawn process for arriving at the base price for airwaves, the official said. In the 2016 auction, the government had put a record 2354.55 MHz of spectrum on sale, which at base price would have netted it Rs5.6 lakh crore. But the sale could raise only Rs65,789.12 crore from 965 MHz, mainly in the 1800 MHz, 2300 MHz and 2500 MHz bands, with Vodafone India being the most aggressive bidder. As much as 47 MHz in the 1800 MHz band, 275 MHz in the 2300 MHz band and 230 MHz in the 2500 MHz band was left unsold. All the 770 units on sale in the 700 MHz band, which had a starting price of Rs 11,475 crore per unit of pan-India bandwidth and accounted for 60% of the bandwidth put up for auction, remained unsold which led to the sharp gap in auction revenue vis-à-vis the expectations at base price.Experts expect the price of 700 MHz band to be lowered this time around. Analysts at Bank of America Merrill Lynch and HSBC foresee a price cut, with HSBC predicting a 15-20% reduction. “Such a move would price 700 MHz cheaper versus 900 MHz in select circles, after which some take-up in 700 MHz could be seen,” HSBC added.