DoT gearing up for another mega spectrum Sale

The telecom department has set the ball rolling for another mega spectrum sale by sending a reference to the sector regulator, seeking fresh base prices for the gamut of airwave bands, including key ones like 700 MHz, 3.3-3.6 GHz and the coveted millimeter waves such as 26 GHz and 28 GHz that support 5G technology.

The Department of Telecommunications (DoT) has also sought fresh base prices for 4G airwave bands such as 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz, two people aware of the matter said. But with the time usually taken for the consultation process, sources say it may be tough to meet government’s auction timeline of January-February, 2022.

The reference comes at a time when the government has acknowledged that high spectrum pricing is a prime reason behind the acute financial stress in the debt-laden telecom industry, and is also open to price rationalisation in public interest.

In its reference, the department has sought recommendations from Telecom Regulatory Authority of India (Trai) on the terms of reference for the next auction and the quantum of airwaves proposed to be auctioned, one of the persons cited told ET.

“We have received a detailed reference from DoT about 2-3 days back, seeking our recommendations on spectrum matters and pricing…there are a number of spectrum bands involved, and the Authority is currently examining the reference and will respond to the government,” Trai secretary V Raghunandan told ET.

Sector analysts expect the potential annual cash flow relief stemming from the four-year moratorium allowed on statutory payouts to give Bharti Airtel and Reliance Jio the financial headroom to participate aggressively in the next spectrum auction. They, though, don’t expect Vodafone Idea (Vi) to participate as strongly if it’s unable to close its much delayed Rs 25,000-crore fundraise.

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Another official said that Trai will need to seek additional details from the DoT, before proceeding with its analysis and starting the consultation process.

After a DoT reference, Trai conducts a process which includes a four-week period for stakeholders to submit their views after a consultation paper is floated, followed by two weeks for counter comments. Then Trai holds open-house discussions before arriving at its recommendations. The whole process usually takes about four to five months at least.

The recommendations are then vetted by DoT’s high-powered wing, the Digital Communications Commission (DCC), which may or may not accept the suggestions. A final decision on spectrum pricing is taken by the Cabinet, based on the DCC’s recommendations.

After that, the DoT issues a Notice Inviting Applications (NIA) which contains the final auction rules, and the sale usually takes place within 45 days from when that document is issued.

Industry executives and analysts say that success of the next auction-that will see the debut of 5G airwaves-hinges on the lowering of base price of airwaves. The last recommended base price of Rs 492 crore for a unit of 5G spectrum in the 3.3-3.6 Ghz band has been deemed too expensive by telcos that defeats the business case of rolling out the next-generation technology in India.

India’s Big 3 telcos-Reliance Jio, Bharti Airtel and Vodafone Idea-have been pushing the government to auction the super-efficient mmWave bands, without which, they claim, 5G services won’t be affordable for consumers in India. They have also urged the sector regulator to reset the base price of airwaves in the coveted but pricey 700 Mhz band.

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