Should Railways get Rs 1 lakh cr spectrum free, Trai wonders

Telecom Regulatory Authority of India (Trai) has sought views on the allotment of 700 MHz spectrum to the Indian Railways for free, which could fetch Rs 1 lakh crore to the government through an auction.

In a consultation paper issued on Monday, Trai said Department of Telecommunications (DoT) has said that while Railways has sought 15 units (10 units initially) in the 700 MHz band free of cost for an unlimited period, this spectrum (at current reserve price recommended by the telecom regulator) can fetch about Rs 1 lakh crore upfront for 20 years, during which, it would also fetch a few thousands of crores of rupees in the form of spectrum usage charge (SUC), accruable quarterly".

Railways had asked DoT to reserve a total 15 units of 700 MHz spectrum, and initially allot 10 units free of cost, on grounds that such 4G-LTE airwaves are required for passenger security and safety in the public interest. DoT referred the matter to Trai in February.

"DoT is of the view that the spectrum in the 450-470 MHz band be explored for meeting the Railways's requirements as reserving 15 units of 700 MHz spectrum would limit the supply of such airwaves, which can also hike their price, and jeopardise the growth plans of telecom operators," Trai said.

In the last auction, 700 MHz spectrum, most efficient for 4G went unsold because of a high reserve price.

In the paper, Trai quoting DoT also said that allotment of 15 units of 700 MHz spectrum to the Railways, would leave only 20 MHz (per circle) of this premium spectrum available for telecom services, which would be insufficient, given that 3-to-4 telecom firms would be operating 4G and 5G services in each circle. This is of the original quota of 45 units of 700 MHz spectrum that was once available with DoT, 10 units had already been carved out for the armed forces, leaving only 35 units proposed for 4G and 5G services.

In the paper, Trai has asked eight questions seeking stakeholder views on the issue – allotment, methodology and pricing, apart from asking whether alternate spectrum bands in the 450-470 MHz range should be explored to meet the Railways's needs, as suggested by DoT. It has also asked suggestions on whether telecom players can build, deploy and maintain the proposed LTE-based radio communications corridor for railway passenger safety. The views on the paper can be submitted by July 22.

Quoting a DoT letter, Tara said, a policy decision would be required for assigning spectrum administratively to Railways, in the light of the Supreme Court judgement, dated February 2, 2012, in the 2G spectrum case.

In its spectrum recommendations, Trai had recommended putting 8,644 MHz of spectrum across bands, on the block, apart from 5G spectrum in the 3.3-3.6 GHz band, which is estimated to fetch Rs 5.86 lakh crore at base price. Trai had also reduced the base price for 700 MHz spectrum by 43% to Rs 6,568 crore per unit.