DoT to Reduce Revenues for Sustainability of Telecom Sector

In the earlier auctions, when the base price of the spectrum was high, the revenues of the DoT couldn’t really make an impact.

Highlights

  • The spectrum purchased through auctions will be valid for the purchaser for 30 years instead of 20 years.
  • The Department of Telecommunications (DoT) is looking to bring balance in the sector.
  • The DoT wants revenue generation from the spectrum auctions, but not at the cost of long-term growth and sustainability of the telecom sector.

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The Department of Telecommunications (DoT) is looking to bring balance to the sector. While the spectrum auctions are a great way for the government to earn big revenues, it affects the telecom sector negatively. In the consultation paper released for the 5G spectrum by the Telecom Regulatory Authority of India (TRAI), it can be seen that DoT is pushing the regulator towards finding the appropriate base price of spectrum for the upcoming auctions.

The DoT wants revenue generation from the spectrum auctions, but not at the cost of long-term growth and sustainability of the telecom sector.

TRAI Asks Whether Spectrum be Reserved for Private Networks

In its consultation paper, TRAI has asked whether the spectrum should be reserved for private networks separately. If so, the regulator seeks to understand what would be the best way to price the reserved airwaves.

In the earlier auctions, when the base price of the spectrum was high, the revenues of the DoT couldn’t really make an impact. This is because a large part of the spectrum went unsold. DoT’s letter to TRAI states that spectrum lying idle is a waste for the economy. Neither is it helping the operators or the government.

Thus, the best way to go forward would be to price the spectrum/airwaves for the 5G auctions in such a manner that almost all of it is sold and both the government as well as the operators are happy.

There’s also the question of how much amount should the operators pay upfront for the spectrum purchased and how much moratorium should be allowed. One good thing that happened recently was the validity period of the spectrum purchased by the telcos increased. So now, the spectrum purchased through auctions will be valid for the purchaser for 30 years instead of 20 years, meaning an increase in the value of the spectrum. For now, the government allows two years as the moratorium period for upfront spectrum payments.

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