What Do Trai’s 5g Recommendations Mean For Telcos?

What are Trai’s recommendations?

Trai has recommended base prices of all spectrum bands that will be put up for auction and a near 36% cut in the base price for 5G bands. It has also introduced a new band —600 Mhz—for 5G and kept the base price the same as 700 Mhz. Spectrum prices will be 1.5 times if airwaves are taken for 30 years instead of 20 years. The use cases to be developed on 5G make the availability of these airwaves that much more significant. The telecom regulator has suggested that captive enterprise networks can be set up by taking spectrum from the government directly or on lease from telecom operators.

Why are the proposals important?

The base price is critical for telcos. These proposals can help the companies firm up their plans on participation in the upcoming auctions, on the quantum of bandwidth they want to bid for. The pricing assumes significance also because buying spectrum and investing in infrastructure would require billions of dollars. Given that the financial health of the carriers is still weak, experts suggest that more reforms are needed. Nevertheless, the fifth generation of cellular technology is crucial. Besides the ability to provide high speed internet access, 5G can enable new services and business models.

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What has been the trend in spectrum prices earlier?

India has traditionally kept base prices on the higher side versus global peers. According to an EY analysis, even after the cut, 5G spectrum in India is still several times costlier than in the UK, Germany, and South Korea. Telecom operators had stayed away from 5G spectrum in the previous auctions of 2018 and 2021 since they found the prices exorbitant.

Will it help telecom companies?

Carriers and industry bodies have said the cut is not enough, asking for at least 90% cut from the last auction price of ₹492 crore per Mhz for pan-India 5G airwaves for 20 years in the 3300-3670 Mhz band, which would have come to ₹49,200 crore for each carrier. While there are three 5G bands, most of the deployments are expected to take place in the 3300-3670 Mhz band. Industry has slammed the suggestions on the grounds that Trai has not given any relief to the carriers, despite the long consultation process.

So, what happens next?

The regulator has to send the recommendations to the department of telecommunications (DoT) for approval. The government can refer this set of recommendations back to the regulator if it feels that all or some of the suggestions need to be reconsidered. Traditionally, Trai has neither reversed nor watered down its suggestions at the stage of recommendations. The DoT can, however, propose changes in the recommendations when they get approval from the Digital Communications Commission.