March 11, 2022
The Indian government is considering lowering the reserve price for 5G spectrum in the auction it is due to hold later this year, it emerged this week.
Details are scant at present, but any break on price would be great news for the country’s mobile operators, which have long complained about the amount they have to shell out for airwaves.
An unnamed Bloomberg source said the state will reduce the base price in an attempt to encourage operators to take part in the sale, as well as to speed up the rollout of actual 5G networks. The decision stems from the fact that the cost of 5G to operators is many times that of 4G deployment, the person said.
The newswire also reported that the auction is likely to take place in August or September. Thus far the official line has been simply that the sale will happen this calendar year, but the authorities have yet to be more specific on that. There was talk of squeezing in the auction before the end of the current financial year, which runs to the end of March, but that was always an unlikely goal and last month the government made it clear that it would commit only to calendar 2021, with a view to 5G services being rolled out in India over the 2022-2023 period.
We’re still waiting for full and final decisions from the various regulatory bodies in India on spectrum prices at the auction, which will see varying amounts of multiple frequency bands put on the block.
However, as reported by the Economic Times late last year, thus far the government has earmarked the highest of those bands, the 3300-3600 MHz band, for 5G and set a reserve price of 4.92 billion rupees (about US$65 million) per MHz. And that figure has drawn the ire of the operator community, with threats of non-participation should such a price level remain.
You can see the telcos’ point. As the paper points out, a telco acquiring the maximum allowed 100 MHz of frequencies in this band would be looking at a minimum bill of the best part of INR500 billion ($6.5 billion). And that’s without taking into account the other available bands, including 600 MHz and millimetre wave frequencies.
There will be many column inches devoted to India’s 5G sale between now and the summer, presuming it actually does go ahead on schedule, with many different stakeholders – including the big three telcos themselves: Reliance Jio, Bharti Airtel and Vodafone Idea – having their say on the price of spectrum. Ultimately, it will all come down to the same two factions: the telcos on one side, warning of their inability to profitably roll out 5G services in a timely fashion if spectrum prices are too high; and on the other the state and the authorities, looking to maximise their returns from their precious commodity, ideally without crippling in the industry in the process.
In the end, there will doubtless be compromises on both sides, and everyone will have something to complain about.