Spectrum auction likely to be held before October without 5G radiowaves

The Department of Telecom (DoT) is likely to hold the spectrum auction before October without the frequency band considered suitable for 5G services, according to official sources involved in the process.

The department is expected to finalise the auctioneer-- agency that will develop and manage software for the auction -- by May 22 and the timeline will also depend on the firm selected.

"Four bidders have qualified in the technical round. They include 2 firms that have experience of spectrum auction. In case an experienced firm is selected, then the auction can begin after two months, and in other case, it can begin after 3 months. Based on the plan in process, the auction can start in August-September also, but the timeline will not go beyond October," a source said.

The source mentioned that DoT is also preparing a Cabinet note to get approval for the auction which does not include spectrum in the frequency range of 3,300 -3,600 Mhz band that was proposed to be used for 5G services.

The defence ministry has demanded 100 Mhz of spectrum in the 5G radiowaves that leaves DoT with only 175 Mhz for auction.

"The discussion is on between DoT and the Ministry of Defence. However, several licences of Bharti Airtel and Vodafone Idea are coming up for renewal and they will need to bid for spectrum to continue their mobile services. Therefore, DoT will need to go ahead with the auction for the rest of the bands," the source said.

The planned auction will put around 8000 Mhz of spectrum under the hammer. This would include 700Mhz, 800Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 Mhz bands cumulatively valuing around Rs 3 lakh crore.

Telecom operators have not been comfortable with what they claim as the high base price of Rs 492 crore per megahertz of 5G spectrum finalised by the Digital Communications Commission (DCC).

A task force constituted under the finance ministry too echoed that the 5G spectrum price is too high given the stress in the sector.

Telecom regulator Trai had initially given recommendation for radiowaves valued at Rs 4.9 lakh crore. Later, DoT included additional spectrum for the auction which would be free from expiration of licences of Reliance Communications, Bharti Airtel in 8 circles and Vodafone and Idea Cellular in 4 circles each. This addition raised the value of Trai-recommended auction plan to Rs 5.22 lakh crore.

However, the exclusion of 5G spectrum from the plan has reduced the total value of airwaves to be put on auction to around Rs 3 lakh crore at the base price.

As per the rules finalised by DCC ,successful bidders will have to pay 25 per cent of the amount upfront for sub 1 GHz, and 50 per cent upfront for higher frequency bands.

Installment will be spread over a period of 16 years. There will be a two-year moratorium for payment after the upfront amount is given. This means that installment will have to be paid from third year, in 16 annual installments.

Successful bidders will be required to make only 10 per cent upfront payment for sub-1 GHz band and 20 per cent for above 1 GHz band for the set of spectrum that will not be available after 6 or 12 months and balance before 1 month of their availability, according to the decision taken by DCC.