GSMA expresses concerns over TRAI’s price recommendation for 700MHz spectrum

By February 2nd, 2016 AT 3:54 PM

The global body of GSM operators GSMA has called for affordable spectrum pricing in the upcoming spectrum auction and expressed its concerns over telecom regulator TRAI’s recommendation to set a starting price of US$1.7 billion per MHz for pan-Indian 700MHz spectrum.

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It said that the short-term gain, long-term pain approach to spectrum pricing should come to an end. As the digital economy becomes increasingly important to India’s future prosperity, the greater focus should be on the long-term benefits of connecting more people in India to affordable mobile broadband, rather than on short-term financial gain.

John Giusti, Chief Regulatory Officer, GSMA, said: “India has one of the lowest Average Revenues Per User (ARPU) across the world (US$2.45 at the end of 2015). Combined with so far limited revenue contribution from data services, competitive pressure on operators’ revenues and high capital expenditure to upgrade networks, this makes it more challenging for operators to recover from high spectrum prices. Spectrum’s greatest value does not come from high sales prices, but rather from its use to expand social and economic opportunity for all India’s citizens. In 2014 alone, the mobile industry contributed 6.1 per cent to India’s GDP.”

The group also argued that the more mobile operators have to pay for a spectrum licence, the less capital is available to roll out new mobile networks.

“High reserve prices and an unrealistic predetermination of spectrum value could also reduce the willingness of potential bidders to buy the spectrum. For example, in Australia, an unrealistically high reserve price resulted in a valuable portion of the 700MHz spectrum left unsold and unused. Unused or under-utilised spectrum benefits neither the economy nor society.”

The group has urged the Government and TRAI to keep in mind the objectives for releasing 700MHz spectrum – one of the most promising bands to expand the reach of mobile broadband services into rural areas – in the lead-up to auctioning this critical spectrum resource.

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Having over six years of experience in business journalism, Krishna has a knack for writing on telecom and IT. She believes that tryst with technology is the best thing that has ever happened to the mankind. Krishna is a telecom analyst with CMR

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