Telecom companies push for 90-95% cut in base price of 5G spectrum

The country’s three leading mobile operators have asked for a steep cut of 90-95 per cent in the base price for the 5G auction in the mid-band 3300-3670.

The regulator had earlier recommended a price of Rs 492 crore per MHZ for pan-Indian spectrum of this band. Telecom companies had complained that this was very high and would make 5G services unviable.

The telcos — Reliance Jio, Bharti Airtel, and Vodafone-Idea, along with the Cellular Operators Association of India — have also said the base price for the crucial millimeter band (24.25 Ghz-28.5 Ghz) should be only 1-2 per cent of that for the mid-band spectrum.

The band is crucial to ensure high speeds in 5G as well as near zero latency —  two key characteristics that differentiate 5G from 4G. However, the regulator has to make a recommendation on its base price for the first time.  

The telcos made their separate submissions to Trai on the last day of the deadline on Monday night. The regulator has been mandated by the Department of Telecommunications to give its recommendations on a relook of the steep base price in the mid-band as well as fix one for the millimeter band for the upcoming 5G auctions, apart from other issues. 

Trai is expected to issue its recommendations sometime in March after which they have to be cleared by the cabinet for the auction process to start.  

There is also consensus among the three operators on how they want to pay for the spectrum, albeit with some variations.  Bharti Airtel has recommended no upfront payment for auctions and a six-year moratorium on any payment.

Vodafone-Idea also supports this. However, while Bharti Airtel wants no interest charged on spectrum installments, Vodafone-Idea wants interest at the RBI repo rate. Bharti Airtel is also demanding a 24-year annual installment plan after the moratorium.

Reliance Jio is ready to pay 10 per cent upfront and settle for a shorter moratorium of five years instead of six. However, it would like to pay the remaining money over 25 years and also believes that the EMIs should be paid at the RBI repo rate of 4 per cent.

Reliance Jio has also tweaked its earlier stance in reserving the additional 1GHz band in the millimeter band between 28.5 GHz – 29.5 GHZ for telcos and not giving it out to satellite broadband players as this will reduce availability for 5G players.

It has now suggested that the entire 1GHz should be assigned through an auction for mixed use by telecom service providers for both terrestrial and satellite networks. Reliance Jio has suggested that the buyer should be allowed to sub-lease part of the 1GHz to any place for the gateway operations of satellite players.

However, the move to reserve the IGhz has been opposed by prospective satellite operators which include OneWeb of Bharti Airtel’s Sunil Mittal. It has been pushing the government to give it at an administrative price at a nominal rate.

Jio also differs with Bharti Airtel on the issue of the 35 per cent spectrum cap. It says that in a three-player market, a 35 per cent cap will not promote competition and advocates a 50 per cent cap instead.  VIL says that the 35 per cent cap should continue but the millimter band should not be included as it would skew the denominator.

The telcos have also agreed that the E-band spectrum should be mandatorily bundled with mid-band spectrum and offered for auction.

EYEING RELIEF

• Telcos seek easy payment terms of 20-25 years, with 5-6 years of moratorium
• Jio wants the spectrum cap to be hiked to 50%
• It is pushing for a mixed use of spectrum in part of the millimetre band between 28.5 and 29.5 GHz
• Trai had earlier recommended a price of Rs 492 cr per MHZ for pan-Indian spectrum