Repriced 700 MHz auction may not have many takers

There is mixed view on whether the unsold spectrum in the 700 mega Hertz (MHz) band should be quickly put back on the block after price re-valuation.

In the recent auction of airwaves by the government, not a single unit of spectrum in this band was bid for because of its steep reserve price of Rs11,485 crore per MHz.

Nitin Sapra, spectrum and policy manager at GSMA, which a global body for mobile operators, said the Ministry of Communications, which conducts the auction, should resolve concerns relating to this frequency band “sooner rather than later”.

“We really want the 700 MHz concerns to be resolved sooner rather than later because remaining unsold spectrum (in 700 MHz band) doesn’t benefit anybody. Just to take a small example of unsold spectrum of 2,100 MHz band. Now, nobody has bid for it (in the latest auction) because 4G (fourth generation) has come. If this frequency band spectrum had been auctioned 2-3 years back it would have got a good response,” he said.

According to Sapra, unsold spectrum was a loss of revenue to the government. He believes if the government did not act fast on the airwaves in the 700 MHz band, the operators would lose interest in it as they would soon start vying for spectrum in the 5G band.

“It (700 MHz) should be auctioned whenever the government is ready to discuss the reduction in prices. Imagine if for two years the 700 MHz band spectrum is unsold. Then, by that time 5G (fifth generation) would come and so nobody will go for 700 MHz (4G),” he said.

According to him, there will be more opportunity for operators to look at the other spectrum bands if the price for those bands is lower than 700 MHz; “At the end of the day, it should make a business case for the operators.”

An industry insider, who spoke on the condition of anonymity, had a contrasting view on the issue, he believes that even if the government were to re-valuate base price of 700 MHz, operators may not lap it up as there were many other pressing problems that were confronting them today.

The most urgent, according to him, was retention of customers because of stiff competition that had emerged post the entry of Reliance Jio.

“I don’t think repricing of 700 MHz will entice the operators. The government can take its own time in re-valuating the 700 MHz reserve pricing because I don’t think operators currently have much appetite for more spectrum. They are too busy addressing other issues,” said a senior executive from the telecom industry.

The GSMA, in its comprehensive research report – The Mobile Economy India, 2016 – said, “The government should consider local market conditions while setting the reserve prices for spectrum auctions. Mobile operators have to pay far more for spectrum compared to other markets even though Arpu (average revenue per user) is significantly lower”.

It says that the government will have a greater capacity to generate revenues in the long term by enabling the low-cost deployment of mobile broadband infrastructure.

“India should start planning now for its spectrum needs in 2020-2025. At WRC-15, additional spectrum bands were identified for mobile broadband particularly L band (1427-1518 MHz), part of C band (3300-1400 MHz) and supporting sub 700 MHz (470-698 MHz). The government should commit to these bands at the national level and prepare a roadmap for the largely unused bands,” said the GSMA report.

It forecasts mobile broadband adoption to grow more than four-fold by 2020, and 4G coverage to increase 14-fold to reach 70% of the population during the same period.