Spectrum auction: Trai to suggest reserve price for 3G, 4G

The department of telecommunications (DoT) has asked the Telecom Regulatory Authority of India (Trai) to suggest a reserve price for auction of the 2100-MHz, 2300-MHz and 2500-MHz bands across all service areas.  

This is a step forward in the idea of auctioning these, in February 2015, along with third generation (3G) and fourth generation (4G) or broadband wireless access (BWA) spectrum.  

The proposed auction is expected to add about Rs 5,000 crore (Rs 50 billion) to the government exchequer, estimates DoT.

However, the auction will only be possible if the ministry of defence (MoD) releases spectrum in the 3G and BWA bands before the said date, DoT said in a recent communication.

“The matter is under discussion at present,” it said in August.  

In the 2100-MHz band (3G spectrum), 5 MHz will be put for auction in 17 telecom zones if the ministry of defence releases the radiowaves. 

Another 5 MHz of spectrum which S Tel had won in three service areas — Himachal Pradesh, Bihar and Odisha —was withdrawn after cancellation of licences and is available for auction, according to DoT’s August communication.  

Auction of 3G spectrum is important for the cellular operators for a pan-India presence and will also help them to offer efficient service to comnsumers.  

In 2010, when the Government auctioned 3G spectrum, no company was able to buy 5MHz of spectrum for all circles across the country.

While Bharti Airtel has 3G spectrum in 11 circles, Vodafone has it in nine circles and Idea Cellular has it in 11 circles.

On the other hand, companies have been offering 3G services across the country through roaming agreements among each other.

But the same was objected by the DoT, and the matter is under the purview of the courts.  

Companies have repeatedly asked for more 3G spectrum as the services could not be scalled up because of scarcity of spectrum, and consumers end up with poor service.

There are more than 40 million 3G subscribers in the country with Bharti Airtel, Vodafone, Idea Cellular and Reliance Communications.  

The government had got Rs 51,000 crore (Rs 510 billion) from auction of 3G spectrum in 2010.  

The next round of spectrum auction is scheduled to start on February 3. The MoD is yet to agree to release 5 MHz of 3G spectrum to the DoT.

The Cellular Operators Association of India has repeatedly proposed that DoT swap 15 MHz of spectrum in the 1900-MHz band with an equal quantum of radiowave in the 3G band of 2100 MHz, unused with MoD.  

It has also stated that 20-MHz of spectrum in the 2300-MHz band will be auctioned in 19 service areas, barring those of Punjab, Rajasthan and Uttar Pradesh (West).

In the 2500-MHz band, the government would auction 20 MHz of radiowaves in eight service areas — Delhi, Mumbai, Kolkata, Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu; 40 MHz will be put on the block in the remaining 14 telecom zones.

Most of the BWA spectrum (2300-MHz and 2500-MHz bands) is available for auction after state-run Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) surrendered the waves allocated to them in 2010. BSNL and MTNL had together paid Rs 11,258 crore ( Rs 112.58 billion) for 20 MHz of BWA or 4G spectrum for all 22 circles.  

In the Budget estimate for 2014-15, the DoT has projected revenue receipts from the coming auction, including sale of airwaves in the 800-MHz, 900 MHz and 1800-MHz bands, at Rs 9,355 crore (Rs 93.55 billion).

It would get an additional Rs 5,000 crore (Rs 50 billion) from auction of 3G and BWA spectrum.  

As companies pay about a third of the total bid value, the government is looking at a total bid value of Rs 28,065 crore (Rs 280.65 billion) from the next round of auction.

The projected figure is conservative, considering the successful auction that generated a total bid value of Rs 61,162 crore (Rs 611.62 billion) in February by selling 46 MHz of airwaves in the 900- MHz band and about 307 MHz spectrum in the 1,800-MHz band.  

DoT says the government is likely to offer 184 MHz of radiowave in the 900-MHz band across 18 telecom zones and 104 MHz spectrum across 17 circles in the 1800 MHz band, which includes airwaves which could not be sold in the previous auction.  

In that one, the government received Rs 18,296 crore (Rs 182.96 billion) for the financial year ended March 2014, about 61 per cent higher than the Budget target of Rs 11,343 crore (Rs 113.43 billion).