House panel, telecom operators concerned about high 5G spectrum price

NEW DELHI: The Parliamentary Standing Committee on Information and Technology, in its report submitted to Parliament in March 2022, observed that the price for the 5G spectrum tabled by the Indian government was “exorbitantly” high compared to other countries that rolled out 5G services earlier and the committee had recommended to the government to reduce the price of the 5G spectrum that will go for auction, significantly.
“Noting that pricing of 5G spectrum in the country is exorbitantly high compared to other countries in the world and there is a need to review the spectrum pricing by taking into account factors such as per capita and ARPU in the country, the Committee had recommended the Department to look into the issue of high spectrum price and come out with a convincing spectrum pricing policy that is sustainable, affordable and acceptable to all,” the Parliamentary standing committee said in its 36th report to the Lok Sabha.
The Committee, headed by Congress leader Shashi Tharoor and comprising 28 other MPs from BJP, Congress and TMC, among others, also noted that in its original report submitted to Parliament in February last year, the COAI (Cellular Operators Association of India) had apprised the committee of the TRAI (Telecom Regulatory Authority of India) recommended reserve price for spectrum in 3300 MHz to 3600 MHz for 5G set at Rs 492 crore being far higher than the auctioned spectrum price in other countries.
“Comparison of unit pricing of 5G spectrum with other countries indicates that it is seven times costlier than the UK, 14 times costlier than Australia, 35 times costlier than Spain and 70 times costlier than Austria. Bharti Airtel has informed the Committee that the price recommended by TRAI is exorbitantly high and ranges from 3-70 times of the market determined price of the spectrum in other countries in absolute terms and is 16 times of the price in relative terms,” the Parliamentary committee in its report noted.
However, TRAI in its clarification to the Committee said that “that if comparison is made in terms of population and geographical size, India’s spectrum price is one of the lowest.”
The Union Cabinet on Wednesday cleared the 5G spectrum auctioning, paving way for consumers to get the experience of ultra-fast internet speed and better calling facilities across all cellular networks.
However, the cabinet cleared the auctioning of the 5G spectrum at a discounted rate compared to what was announced in 2018. The government has now set the base price for 3300-3600 MHz band or airwaves best suited for 5G operations at a cost of Rs 317 crore on a pan-India basis, which is a discount of 36% from the previous price of Rs 492 crores. The government is set to raise Rs 4-5 lakh crore as part of this auction.
The companies have also been given the flexibility to make payments for the spectrum that they are allocated for. According to the government statement, the telecom companies who would get the bid for the 5G spectrum would be able to pay their spectrum price through instalments and that an upfront payment is not mandatory.
The government has also given relaxation to companies that would like to pay upfront for the spectrum price and for all those companies who chose to pay the upfront price can take a moratorium of two years to pay for the spectrum. However, despite this, telecom operators have raised concerns with the price for the 5G spectrum being high as they say that the telecom companies in India are already cash trapped as they are facing a massive competitive market where they are unable to raise the cost of their services and at such a time paying for 5G spectrum at such high prices would be a dampener for these telecom operators.
Analysts also say that at a time when Vodafone-Idea is almost bleeding with their finances and that Bharti Airtel is facing tough competition from Reliance Jio, India is unlikely to see any aggressive bidding for the 5G spectrum. A total of 72,097.85 MHz of 5G spectrum would be up for sale and bidders can apply for the 5G spectrum bid till July 8. The 5G spectrums would be available in various low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), mid (3300 MHz) and high (26 GHz) frequency bands.
Globally, a total of 118 operators in 59 countries have deployed 5G network. Currently, the 5G network covers around 7% of the world population. It is expected that 20% of the world population will be covered by 2025. Major countries where 5G technology has been launched are USA, Canada, UK and European Union, Asia Pacific countries like China, Japan, South Korea, Thailand, Australia, New Zealand and Philippine etc. In the Middle East, UAE, Oman, Saudi Arabia, Qatar, Kuwait, and Bahrain have also launched 5G. In Africa, 5G has been launched in South Africa. Mostly, 5G has been launched partially in these countries. Countries in Asia Pacific like South Korea, Japan and China have witnessed sizable growth in 5G developments and possibly they are ahead of the curve.