Spectrum Prices Recommended Are Rational, Based On Scientific Calculation: Trai Chief

Amid the industry's concerns over less-than-expected price cuts, Trai Chairman PD Vaghela on Tuesday asserted that the regulator's recommendations of a 39 per cent drop in spectrum prices are rational, attractive and backed by "scientific calculations".

Vaghela told PTI that in view of the huge market potential of 5G, he is confident that the telecom industry will actively take part in the auction.

The chairman expressed hope that the recommended reserve prices will attract bidders in the forthcoming auction. 

He also said that the ease of doing business, extensive stakeholder inputs, and facilitating the proliferation of 5G in the country have been the most important drivers for Trai's latest stance. 

Setting the stage for the rollout of 5G services, telecom regulator Trai on Monday recommended a mega auction plan valued at over Rs 7.5 lakh crore at the base price across multiple bands for radiowaves allocated over 30 years.

Overall, the Telecom Regulatory Authority of India (Trai) recommended about a 39 per cent reduction in the reserve or floor price for the sale of spectrum for mobile services, including the latest 5G offering, as it looked to match revenue expectations with the industry's paying capacity.

Industry body COAI, however, has expressed deep disappointment over Trai's 5G recommendations, and termed the spectrum pricing suggested by the regulator as "too high".

Given the recent reforms for the telecom sector announced by the government, these recommendations are "one step backwards than forward" towards building a digitally connected India, COAI claimed.

COAI argued that the industry had recommended 90 per cent lower prices, and to see only about 35-40 per cent reduction recommended in prices "is deeply disappointing".

Asked about the industry's views on less than expected price cuts, Vaghela in an interview said the regulator's recommendations of a 39 per cent drop in spectrum prices are backed by "scientific calculations".

"Trai takes the business of calculation of valuation seriously, and on that basis, we have arrived at rational reserve prices. The prices we have given have been set at 70 per cent of valuation," he said.

Taking off from the telecom department's reference seeking auction-related recommendations, Trai considered various aspects like ease of doing business, stakeholder inputs and most importantly, the proliferation of 5G and use cases in the country to ensure that economic benefits of technology are derived by all sections of society, he said.

"If you see our recommendations on surrender fee, easy and flexible payment options, and leasing of spectrum for private networks, these are all aimed at ease of doing business and attracting investment into the telecom sector," Vaghela said.

While auctions and network rollout are important considerations, "as a country, we need to facilitate penetration of 5G based technologies and use cases", Vaghela said.

"A complete ecosystem needs to be created towards this objective," he said.

"So, we have recommended action plans for vertical sectors, i.e., industry sectors and social sectors ...that they should be actively preparing plans for adopting 5G applications. Stakeholders like farmers, fishermen, students, MSMEs etc. need to be further empowered to be part of the digital economy," Vaghela added.

5G technology once implemented should create demand for telecom products, thereby improving revenue streams for telecom service providers, and should also help consumers and the public at large to become a part of the mainstream digital economy, he noted.

"India should reap the benefits of technologies and applications, which are based on 5G," the Trai chief said.

On whether the industry has the paying capacity, given that over one lakh megahertz of spectrum worth over Rs 5 lakh crore at reserve price will be on the block (for 20-year allocation), Vaghela said, "With the attractive reserve prices recommended, flexible payment options offered, easy spectrum surrender conditions, recommendations on leasing etc., the forthcoming auction will surely be attractive for the investors". 

The Indian economy is growing, technology adoption is being ramped up by different vertical sectors and the market for telecom products is expanding at a rapid pace, he noted.

"In view of the huge market potential of 5G, I am sure that the telecom industry will actively take part in the auction," he said.