4G and 5G Services Will Drive Demand for Spectrum in the Next Round of Auction: Trai

The Telecom Regulatory Authority of India (Trai) has now stated that 4G and 5G services will drive demand for spectrum in the next round of auctions, contesting the view that financially-stressed firms are likely to tread cautiously despite steep price cuts for several previously unsold bands. “Considering that 5G services are going to be implemented in the near future, we expect there will be a definite demand particularly for bands where 5G ecosystem has been developed… Telecom operators will bid for it. This includes 700 MHz band that can be utilised for 5G,” Trai Secretary S K Gupta told PTI.

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He said that the Trai’s recommendations on reduced rates for 700 Mhz band took into account the price of the spectrum that was recently auctioned in markets like Singapore, Germany, Denmark, Turkey and Taiwan.

Trai recently recommended the auction of about 8644 MHz of telecom frequencies at an estimated base price of Rs 4.9 lakh crore. At around Rs 6,568 crore per Mhz, the regulator has suggested a whopping 43% cut in base price for the premium 700 Mhz frequency which had failed to attract buyers in the last auction held in 2016.

“We have clearly indicated that prices now recommended are in line with international trends. As far as the financial health of sector is considered, the spectrum price has to be derived based on numerous factors, and more so this is only the reserve price. The industry will take care of requirements based on their need and strengths” Gupta said.

A new 3300-3600 Mhz band has opened up for 5G services, he said, adding that “enormous opportunities” are available for telecom operators to bid for the spectrum they need for the next-generation services.

“As for other bands, many of the service providers have sufficient spectrum with them. But depending on their business model and need, they may bid for spectrum in different bands. I am very optimistic,” he said.

Gupta added that Trai’s optimism for demand flowing-in for 700 Mhz, is based on the development of an ecosystem for the band.

“We expect demand will be there in 700 Mhz also because the ecosystem has developed to a great extent and it is becoming a desired band for LTE and 5G service. So I expect this particular band will be utilised to provide LTE and 5G services in future,” he said.

Long-Term Evolution (LTE) refers to a standard for high-speed wireless communication for mobile devices.

While the regulator suggested a discount in base prices of key spectrum bands, including 700 Mhz, 800 Mhz and 1800 Mhz (compared to the 2016 auction), it has batted for putting on sale an additional 550 Mhz of 5G spectrum that has been reserved for ISRO by the Department of Telecom (DoT). It has mooted a pan-India base price of Rs 492 crore per megahertz unpaired spectrum for proposed 5G spectrum (3300-3600Mhz).

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