Trai Lowers the Price of 700 Mhz Band by 43% to Attract Buyers

The Telecom Regulatory Authority of India (Trai), earlier today released its recommendations on the price of 4G and 5G spectrum. Trai recommended a pan-India base price of Rs 492 crore per megahertz for 5G radio waves and lowered the base price of frequencies that remained unsold in the 2016 auctions. The price suggested for 5G spectrum is about a third of the 1800 MHz band in 2012. Known as the 2G spectrum at that time, the government had fixed base price at around Rs 2,800 crore per Mhz on a pan-India basis for paired spectrum (an equal chunk of frequency for uplink and downlink) in the 1800 Mhz band.

Trai-spectrum-700mhz

Trai has recommended that base price of proposed 5G spectrum in 3300-3600 Mhz band “should be equal to 30% of the reserve price of 1800 MHz FDD band” at about Rs 492 crore per Mhz unpaired spectrum on pan India basis.

Telecom operators bidding in the next round of auctions for the spectrum to provide next generation of mobile services will have to shell out a minimum of Rs 9,840 crore on pan-India basis to buy spectrum in 3300-3600 Mhz band as Trai has suggested that it “should be put to auction in the block size of 20 MHz”.

Based on these recommendations submitted to the government, the base prices and timing for the next round of auctions will be finalised.

It has recommended the auction of entire spectrum available in various bands barring the specific locations or districts where ISRO is using the 25 MHz (3400 MHz – 3425 MHz) of spectrum.

The Telecom Regulatory Authority of India has suggested a base price of Rs 3,285 crore per megahertz for paired spectrum in 1800 Mhz band.

For the premium 700 Mhz band, Trai has said that its “reserve price…should be equal to 2 times of reserve price of 1800 MHz spectrum band”, resulting in about 43% reduction in the price of this band to Rs 6,568 crore per Mhz for paired spectrum.

In 2016, the government had fixed the base price of 700 Mhz band at Rs 11,485 crore per Mhz, which was around four times the price of 1800 Mhz band. Operators were required to buy radiowaves worth Rs 57,425 crore to provide mobile service in this band.

The cost of providing mobile services in 2G, 3G and 4G technology is estimated to be around a-third of service provisioning in 1800 Mhz band.

About Rs 4 lakh crore of 700 Mhz spectrum was put for auction, but there were no takers for this band due to its high price.

If Trai recommendations are approved by the government, then telecom operators in the next round will have shell out a minimum of Rs 32,840 crore for providing services in the 700 Mhz band on pan India basis.

The regulator has suggested using higher of the two figures 80% of the average valuation of spectrum band in the licensed service area or the price realised in the October 2016 auction for calculating the base price of radiowaves in 800 Mhz, 900 Mhz, 1800 Mhz and 2100 Mhz bands.

Trai has recommended base price of Rs 4,651 crore for paired spectrum in 800 Mhz band covering 19 circles, Rs 1,622 crore per Mhz for 900 Mhz band covering seven circles, Rs 3,399 crore per Mhz of in 2100 Mhz covering 21 circles and Rs 821 crore per Mhz in 2500 Mhz band covering 12 circles.

The regulator has recommended Rs 960 crore per Mhz for unpaired spectrum in 2300 Mhz band on the pan-India basis.

While all the spectrum at present can be used for 4G and 5G, experts have suggested the use of higher frequency bands like 3300-3600 Mhz for 5G services.

To avoid monopolisation of suggested 5G spectrum band, Trai has recommended a limit of 100 MHz per bidder and also “the lock-in period for spectrum in this band for becoming eligible for spectrum trading should be five years” instead of 2 years applicable for other bands, as reported by PTI.

It has suggested no time bound network roll out the obligation for buyers of the potential 5G spectrum.

Trai has recommended that the telecom operators buying spectrum 700 Mhz, 800 Mhz, 900 Mhz and 1800 Mhz need to roll out network across 60% of district headquarters (DHQs) or town by the end of three years and 30% of block headquarters by the end of 5 years from the effective date of licence or the date of assignment of spectrum won in the auction process.

Successful bidders of 2100 Mhz band, earlier known as 3G spectrum, will have to roll out the network in 70% of DHQ by the end of 5 years, according to the recommendation.

The regulator has recommended that in case a company has closed 2G GSM or CDMA services, it cannot hold the administratively (without auction) assigned spectrum for which it has not paid the market determined price.

“Any such spectrum lying with TSPs (telecom service providers) should be taken back and put to auction in the forthcoming auction,” Trai said.

Its has reiterated need for an urgent audit of all allocated spectrum, both commercial as well as the one given to various public sector units and government organisations through an independent agency on a regular basis.

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79 Comments on "Trai Lowers the Price of 700 Mhz Band by 43% to Attract Buyers"

 

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Raju
August 2, 2018 6:20 pm 6:20 PM

Any news about idea vodafone merger

Kaushik kolkata
August 3, 2018 1:11 am 1:11 AM

After idea replacing some bank guarantee of Vodafone for spectrum money.

Chetan Malhotra
August 2, 2018 3:11 pm 3:11 PM
BREAKING:::: FRESH trouble for RCOM, Ericsson take U-Turn on settlement agreement done in May with Rcom in supreme court today. Ericsson says that it is not happy with settlement and needs to re negotiate. Supreme court accepted its argument and will hear on friday morning . Looks like Rcom will be pushed towards bankruptcy and assets will be sold in liquidation. Parallely DOT will cancel its spectrum post TDSAT hearing on 10th Aug as court will also realise that money is not going to come for spectrum payments… So 90% chances are that deal between Jio and Rcom is under… Read more »
Kaushik IMA
August 2, 2018 6:53 pm 6:53 PM

Worst management at Rcom. Their current top management should never get a job anywhere from now on. Talk of getting a golden opportunity and completely throwing it away….

NIKHIL Mumbai-Pune
August 3, 2018 12:20 am 12:20 AM

LoL.

NIKHIL Mumbai-Pune
August 2, 2018 6:32 pm 6:32 PM

Hopefully BSNL returns both.

NIKHIL Mumbai-Pune
August 2, 2018 6:31 pm 6:31 PM

I mean 10Mhz contiguous. If they fail to do this then they will go for 700Mhz in upcoming auction and they might get band 41 spectrum as well.

Chetan Malhotra
August 2, 2018 8:16 pm 8:16 PM

@nikhil, how Jio will continue its business without band 5 ??? If spectrum gets cancelled on 10th August…. Is the main question I am emphasizing ….

NIKHIL Mumbai-Pune
August 3, 2018 12:25 am 12:25 AM

Airtel will return band 5 spectrum as well. There are lots of possibilities lying around.

NIKHIL Mumbai-Pune
August 3, 2018 12:23 am 12:23 AM

There is unsold spectrum at DOT. BSNL might return it. Mukesh should not rely on only one source. Invest heavily in 700Mhz spectrum. He is not raising prices also? How he is going to get returns on investment.RCom spectrum is coming to an end in 2021. Do you have any immediate solution for that?

NIKHIL Mumbai-Pune
August 2, 2018 6:30 pm 6:30 PM

Even though it’s not much of deal to Jio. There is lot of spectrum available in band 5. Question is they won’t be able to make 10Mhz PAN India. If BSNL doesn’t return their band 5 spectrum and Airtel holds up the spectrum from Tata Docomo.

Kiran Fernandes | Goa
August 2, 2018 5:16 pm 5:16 PM

So does this mean that Jio will lose the band 5 spectrum being shared by Rcom if the deal fails?

Chetan Malhotra
August 2, 2018 6:28 pm 6:28 PM
Not because of the deal alone, if deal fails they can still participate during liquidation phase when 180 days get completed with IRP. But they can lose band 5 spectrum on 10th August itself when tdsat will hear case of RCom on dot threating to cancel licensed since payment towards spectrum charges is not made for couple of months now…. RCom is giving Goli to all banks , Ericsson and dot that let Jio buys spectrum and pay money then I will pay to you untill then please hold on. Dot , Ericsson is not buying this story and even… Read more »
Kumar
August 3, 2018 12:37 pm 12:37 PM

Alert::: RCom rallied 15 per cent after ETNow reported that the Supreme Court has allowed the telecom firm to sell its wireless and tower assets to Reliance Jio.

Kiran Fernandes | Goa
August 3, 2018 3:45 pm 3:45 PM

Woah Kumar, that’s awesome. Fk rcom. As long as Jio gets the spectrum and rcom dies, then it isn’t a problem. Anil was like “lemme just get rid of rcom right away, idc what shiz happens.”

NIKHIL Mumbai-Pune
August 2, 2018 6:27 pm 6:27 PM

Yes Same question.

shuviii
August 2, 2018 2:43 pm 2:43 PM

i have no option other then jio or airtel. both of them gives 2 mbps in name of 4g. even if i am ready to pay more for stable and faster speeds.. um really frustrated with the data speeds. atlest i was able to use 1 gb data when airtel was giving it for 180… but thngs are not same now. they are fighting for cust base. but will eventully lose to the one who can give qualty at the end..

NIKHIL Mumbai-Pune
August 2, 2018 6:32 pm 6:32 PM

From Diwali, everything will improve on Jio side,if RCom deal is successful.

dragonmonk
August 3, 2018 11:57 pm 11:57 PM

Lol! :))))

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