Trai told to take a relook at spectrum auction, pricing

The government has asked telecom regulator TRAI to reconsider its recommendations on spectrum auction for 4G and 5G, including reserve price, the quantum of spectrum to be auctioned among others in a bid to promote competition and ensure the benefits of an auction reaches all.

The Digital Communications Commission (DCC) on Thursday decided to refer back TRAI's recommendations for a relook keeping in mind the objective of Digital India and Broadband for All. The Commission also approved terms and conditions for 5G trials in the country, according to sources.

"We do not want 5G to be only used in smart cities or smart vehicles. We want the benefits to reach all social sectors..we want 5G to be used for rural health and rural education. The current recommendations should be revisited to make sure that all the proliferation of 5G and broadband actually happen," a senior official from the ministry said. Given the consolidation in the sector, TRAI should ensure that there is enough competition in the auction.

The views of TRAI have been sought within a month.

The development comes on the heel of incumbents including Airtel and Vodafone Idea raising concerns over the high reserve price of 5G spectrum. Vodafone Idea wants the auction to happen in 2020. Even experts have warned about a tepid response to the auction if it happens this year, as announced by the government. The cumulative debt of the industry stands at around Rs 7 lakh crore and the lack of alacrity by the telecom industry is palpable. The entry of new player Reliance Jio in the sector has pushed the financials of incumbents, Airtel and Vodafone Idea, on a downward spiral, apart from consolidation in the industry.

Crisil Research director Hetal Gandhi said, "It is quite pertinent to reduce the reserve price in order to see healthy participation across circles by the telcos. The telecom industry is expected to recover this fiscal, hence auction if held next fiscal at lowered reserve price might be an optimal solution for the government as well as telcos."

In August last year, TRAI had come out with its recommendations on spectrum auction, wherein the base price of 700 MHz (which went unsold in the last auction in 2016) was reduced by 43 % at Rs 6,568 crore per MHz, from the earlier Rs 11,485 crore.

Also, TRAI has to ensure that all spectrum is put on the block, unlike previous auctions.

In the past around, 40% of the spectrum was put out for auction. This time, the Commission is of the view that all the spectrum should be put on the block, and the regulator should ensure how can the spectrum the auctions be optimized in such a way that it contributes maximum to the exchequer, the official said.

The government expects 5G to become a reality by 2020 and wants to be at par with global countries for launching next generation services 5G. But the fact is that 5G technology deployment needs huge fiberisation. Only one-fourth of towers in India are fiberised while globally, it is 70-80%. Also, 5G will be a niche service and mainly target segments such as healthcare and education.

The commission also approved a public-private partnership for BharatNet, the optical fibre project to connect all gram panchayats. BharatNet fibre will be used to link homes, developmental institutions and towers as well.

The private sector will be given rights to monetise the fibre through a 20-year lease. This will also encourage much more convergence with cable providers etc. It will remain a national asset and the government will own it through BBNL, a special purpose vehicle for BharatNet.

Till the PPP mode kicks in, Common Service Centers will take the fibre of 100,000 GPs where it has already been laid and will maintain and start delivering services through WiFi hotspots. CSCs will connect the development institutions around GPs, the official said.

No final call on Huawei, yet

The government is yet to take a final call on participation of Chinese player Huawei in 5G trials, which was approved on Thursday.

The Department of Telecommunications (DoT) is keeping an eye on global developments regarding Huawei and will allow partnering with companies for 5G rollouts only after ensuring that there is no compromise on security, telecom secretary Aruna Sundararajan said.

"It will be a calibrated decision, we will ensure all security certification and there will be no compromise on security. But equally, we will drive a hard bargain to ensure that Indian startups are included," she said.

India is engaged with global vendors and is tracking global developments in this regard.