Telecom operators will get spectrum for 20 years at the upcoming 5G auction because the Digital Communications Commission (DCC) on Tuesday approved the option in consultation with an internal committee appointed by it. The development is significant because the government announced in September last year that spectrum would be offered after auction for a period of 30 years from now.
Approval from the DCC comes after the Telecom Regulatory Authority of India (TRAI) in its reference left the government to decide the term of spectrum lease – 20 years or 30 years. A standing committee of the Department of Telecommunications (DoT) suggested that telecom companies should be given an option to buy spectrum for 20 years because getting airwaves for 30 years was becoming more expensive. TRAI recommended that the reserve price for a period of 30 years be 1.5 times that of 20 years.
In addition to the term, the DCC, at its meeting on Tuesday, also approved the reserve price proposed by TRAI. The DoT will now send the proposals to the cabinet, which is sitting in a meeting on Wednesday. The Cabinet may take a call if further reduction in reserve price is required or not.
According to sources, at the last meeting of the DCC, the policy commission highlighted that the price of 5G spectrum should not be viewed from the perspective of revenue maximization but through public welfare options like its utility in healthcare, education etc. However, DCC felt that TRAI had already reduced the price of 5G by 36% and since spectrum would be offered for 20 years, the cut was sufficient.
The commission did not disagree with TRAI on the reserve price, although operators expressed concern about it being too high. Telecom operators demanded a 90-95% reduction in reserve prices and felt that despite the cuts, prices remained higher.
By reducing the reserve price of 5G spectrum in the 3,300-3,670 MHz band at Rs 317 per Mhz by 36%, operators can buy 100 Mhz at Rs 31,700 crore as against Rs 49,200 crore in 2018.
Once the Cabinet approves the matter, the DoT will immediately begin work on the Notice of Invitation (NIA) and its disclosure by May 25. This document is very important because it contains all the formal guidelines for the auction process Once the NIA is finalized and released, it usually takes 54 days for the auction to begin.
Communications Minister Ashwini Vaishnav on Tuesday said the auction is on schedule and the government expects good participation from companies. The auction is expected to end in a few days as there are only 2-3 operators and most of the spectrum is likely to be sold at the reserve price.
Once the sales process is complete, DoT will try to allocate frequencies to telecom operators as soon as possible, so that commercial roll-outs occur as soon as possible. The DoT is aiming to launch the commercial 5G services desired by the Prime Minister’s Office (PMO) on August 15.