DoT in favour of 20-year validity for spectrum in upcoming auction: Reports

Sources told PTI that the Department of Telecom is going with Trai-recommended reserve prices to the Cabinet, which will ultimately take a call on these crucial issues related to 5G spectrum auctions

The telecom department is batting for a 20-year validity for spectrum to be put on the block in the upcoming auctions, according to multiple sources.

The sources told PTI that the Department of Telecom (DoT) is going with Trai-recommended reserve prices to the Cabinet, which will ultimately take a call on these crucial issues related to 5G spectrum auctions.

On the vexed issue of captive networks that has seen telcos and tech players locked in a battle, the sources said the DoT is not in favour of an immediate administrative allocation of spectrum for private 5G networks in this round.

They pointed out that sector regulator Trai had mentioned that detailed studies would be done (to assess the demand and market) for such captive networks.

Conducting such studies would require more time, sources said.

Also, Trai itself has not given any suggestions on modalities or rates for any such an administrative allocation, the sources said, adding in the same breath that the final decision on all of these matters will be taken by the Cabinet.

Overall, the telecom department is in favour of 20-year validity for spectrum put for auction, as the regulator Trai had worked out its calculations for reserve price on a 20-year basis, according to the sources.

In its 5G recommendations in April this year, the Telecom Regulatory Authority of India (Trai) had said that the reserve price of spectrum allocation in case of 30 years should be equal to 1.5 times the reserve price of spectrum allocation for 20 years for the respective band.

The sources said that while Trai has suggested a '1.5 times' formula to calculate the base price for 30 years of validity, this may push up the interest outgo and instalments for players, running contrary to the spirit of reforms that sought to reduce the burden on telecom companies.

The mega auction was initially expected to be held in June, but those timelines are now likely to spill over given that the Cabinet is yet to approve the modalities of the 5G spectrum auction.

It was widely anticipated that the Cabinet will take a call on spectrum pricing for 5G auctions and related modalities at its meeting held on June 8 (Wednesday).

The sources said the DoT is very hopeful that the matter would be taken up next week.

Telecom regulator Trai recommended about a 39 per cent reduction in the reserve or floor price for the sale of spectrum for mobile services, including 5G, but the industry has termed the spectrum prices suggested by the regulator as "too high".

Cellular Operators' Association of India (COAI) has argued that the industry recommended 90 per cent lower rates, and to see only about 35-40 per cent reduction recommended in spectrum prices "is deeply disappointing".

Meanwhile, a war of words has also erupted between telcos and tech companies on the contentious issue of captive networks ahead of spectrum auction for next-generation services.

While industry body Broadband India Forum (BIF) has pushed for the direct allocation of spectrum for private 5G networks to enterprises at a nominal administrative fee, mobile operators have hit back saying that if independent entities are indeed allowed to set up private captive networks with direct 5G spectrum allotment, "the business case of TSPs (Telecom Service Providers) will get severely degraded".