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India promises spectrum reform as telcos bemoan status quo

The Indian Government has promised it will reform the pricing structures of spectrum auctions over the coming months as telcos cast their eyes to the 5G horizon.

Speaking at the India Mobile Congress, Telecom Minister Ravi Shanker Prasad suggested a new wave of spectrum auctions would take place over the next 12 months, and much to the happiness of the telcos, the team will work to make it cheaper.

While numerous nations around the world have been pushing forward with their own spectrum auctions to ready economies for the 5G euphoria, India is one where progress has been incredibly sluggish. There have been attempts to get the ball rolling, however industry has pushed back due to the high base prices which were set by the Government.

In 2016, 2354.55 MHz of spectrum ranging across the 7 bands was auctioned off, with many of the telcos applying to participate. Unfortunately, the end result was only 40% of the licences being allocated, with price seemingly being the reason.

In 2017, another consultation process was launched by the Telecom Regulatory Authority of India (TRAI), with the aim being to push out 5G spectrum and the unallocated assets from the 2016 edition. No further action was taken following the end of the consultation, with industry requesting the auction be pushed back.

The comments from Prasad might well be a watershed moment in the stalemate. It seems the Government was the first to twitch on the pricing conundrum.

Speaking at the same event, Vodafone Idea Chairman Kumar Mangalam Birla said, “while we stand committed to support the growth of the industry, we seek enabling regulatory environment to ensure that necessary investments are made.”

Reliance Jio board member Mahendra Nahata also suggested pricing for 5G spectrum should “critically looked at”. The general feeling appears to be the Government is not looking at the big picture, targeting revenues derived from spectrum sales in the short-term, instead of looking long-term at national economic growth which can be achieved through the continued progress being made in the connectivity world.

This is of course an equation which is difficult to balance. The telcos will always want to make sure they are paying as little as possible for spectrum licences and will promise the difference will be invested in network deployment. This is a reasonable assumption, though there is no way to prove charging less for spectrum licences would result in increased network deployment. The telco might well have spent the same but is trying to reduce expenditure.

Industry is of course perfectly entitled to push back against what it would perceive as pricing structures which are too expensive, but this will have a negative impact on the business and the nation. Pricing of spectrum is very difficult balance, as there is no rule which can be applied everywhere.

India is a very unique market, as while it has the second largest population of consumers worldwide, it does also have low ARPU and significant expenditure to make on network deployment.

While telcos moaning about the price of spectrum is nothing new to consider, a slight concession from the Indian Government is certainly a step in the right direction. There will be months of negotiation and research to understand what a suitable pricing structure actually is, but this is a much more promising sign that spectrum auctions in the near future will be successful.

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