DoT to seek Trai's views on new 5G spectrum; wants sale of additional bands in 2020

New Delhi: The Department of Telecom will soon seek sector regulator Trai’s recommendations on pricing and other modalities for coveted 5G bands of 24.75-27.25 GHz, and wants to put this new spectrum up for auction sometime next year, sources said.

This new 5G chunk is separate from the Rs 5.22 lakh crore spectrum sale plan approved by the Digital Communications Commission on December 20, under which 8,300 MHz of airwaves across 22 circles are set to be put on the block in March-April 2020.

The Department of Telecom (DoT) sources said that the government will soon approach the Telecom Regulatory Authority of India (Trai) for its recommendations on ‘millimeter-wave bands’ of 24.75-27.25 GHz, the coveted bands for 5G.

DoT plans to approach the regulator in January for views on these additional 5G bands, sources stated. Although DoT ideally wants these bands to be put for sale earlier in the year, there are specific timelines involved in Trai reference and responses, they pointed out.

That said, DoT wants to put this additional spectrum belonging to new 5G bands for auction sometime during 2020, they noted.

Asked about the industry’s low appetite for spectrum at a time when it is struggling with payment of additional statutory dues after a recent Supreme Court ruling on Adjusted Gross Revenue (AGR), the sources pointed out that the industry, including its association COAI, has been asking for 26 GHz band to be referred to Trai.

On whether there will be takers for additional spectrum, given the industry’s reservations on current prices, the sources said they would not like to “pre-judge the issue”.

Offering back-of-the-envelope calculations on the current rates, the sources said that while Rs 5.22 lakh crore is the overall reserve price for 8,300 MHz of airwaves, only 35 percent is for 5G bands.

After accounting for the quantum of 5G spectrum that each operator can take from the current chunk of radiowaves slated to go under the hammer in March-April, and taking into consideration the upfront payment requirements, a telco will only have to shell out Rs 9,000 crore for the said spectrum.

“Moreover, there is a two-year moratorium on spectrum payments. The remaining amount (after upfront payment) has to be paid in 16 installments…If companies have a vision of giving 5G to the country then they should also be able to invest that much money, remember, they also have to invest in Capex, and 5G application, etc. It has to be a complete model,” a source said.

When contacted, Cellular Operators’ Association of India (COAI) Director-General, Rajan Mathews told PTI, “We are very pleased that DoT has decided to approach Trai on the new bands. This will help provide an adequate amount of 5G spectrum, but still, we will wait to see the pricing for this band.”

Mathews added that DoT’s latest decision on new bands is a “move in the right direction” and will be crucial for companies aspiring to adopt 5G offerings.

It may be recalled that COAI has been urging the government to seek Trai’s views on 26 GHz band. “We request an early referral from DoT to Trai to make a recommendation for including the 26 GHz band for the planned spectrum auction in conjunction with other bands as this is imperative and will have a significant bearing on realizing the deployment of 5G in India,” Mathews had said in a year-end note recently.

Last week, the DCC gave its nod to spectrum auction plans entailing 8,300 MHz of airwaves pan-India at a reserve price that adds up to Rs 5,22,850 crore. The government did not reduce the price of the spectrum despite a request from telecom operators.

Trai on August 1, 2018, had recommended auction of spectrum in the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300-3400 MHz, 3400-3600MHz bands.

DoT had so far not sought Trai’s views on 5G bands of 24.75-27.25 GHz so far, which will now be done shortly, the DoT sources added.

The COAI had earlier ruled that the quantum of spectrum in the 5G band being put up for auction in March-April will be only 175 MHz, “woefully inadequate” for operators to roll out robust 5G network.

With spectrum reserve prices four to six times higher than that of a similar spectrum sold recently in several countries, high levels of debt and prevailing financial stress in the sector, telecom service providers will find it very difficult to raise funds to participate in the auctions, the industry association had contended.

The COAI had at that time also pointed out that it will be prudent to let the sector regain some financial strength from the recent initiatives undertaken before scheduling the auction, and that the interim period can be used to design and test India specific 5G use cases.

Bharti Airtel, Vodafone Idea and other telecom companies owe the government as much as Rs 1.47 lakh crore in past statutory dues. These AGR liabilities arose after the Supreme Court in October this year upheld the government’s position on including revenue from non-telecommunication businesses in calculating the annual Adjusted Gross Revenue (AGR) of telecom companies, a share of which is paid as license and spectrum fees to the exchequer.

The apex court had allowed three months to the affected telcos to cough up the amounts due to the government.