India's Telecom regulator finally released much-awaited recommendations for the upcoming 5G spectrum auction.

The telcos can now heave a sigh of relief with the Telecom Regulatory Authority of India (TRAI) recommending a major cut in the base price of the spectrum.

On a pan-India basis, the reserve price now comes down to INR39.27 billion (US$516 million) per MHz, 40% lower than the original prices recommended by TRAI in 2018.

The recommendations, based on a consultation paper, will need to be approved by the government before the auction. Plans are for the 5G spectrum auction to be held in May and June 2022, with the 5G launch by August 15, India's Independence Day.

Figure 1: The price recommendations are for a 20-year period.
(Source: rahul jarwal on Unsplash)

TRAI has suggested a 36% reduction in the original base price of spectrum in the 3300-3600MHz frequency band from INR4.92 billion ($64.6 million) to INR3.17 billion ($41.63 million).

The regulator is also advocating for a price drop of 58% and 45% in the 700MHz spectrum for Mumbai and Delhi category-A circles. The same rates are set for 600MHz, a new band not included in the original sale.

This, along with 700MHz, will provide a contiguous spectrum for the telcos. The 700MHz spectrum, usually in demand because of better coverage, remained unsold in the last two auctions because of the high reserve price.

The plan would run for a 20 year period.

"The reserve price of spectrum allocation in case of 30 years should be equal to 1.5 times the reserve price of spectrum allocation for 20 years for the respective band," said one of the key recommendations.

What's on sale

TRAI has recommended the sale of all spectrum in existing bands 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz, 2500MHz and new spectrum bands 600MHz, 3300-3670MHz and 24.25-28.5GHz.

The organization is backing the sale of both the band plans, n77 and n78, for the 3300-3670MHz band, giving service providers the flexibility to adopt any band plan based on their own business strategy.

Similarly, operators will be free to adopt any band plan, n257 or n258, in 24.25-28.5MHz frequency, as recommended.

Moreover, TRAI recommends that the Department of Telecommunications (DoT) develops a plan to refarm the 526-528MHz band. To ensure that the spectrum is contiguous, the DoT should also carry out harmonization in the 800MHz, 900MHz and 1800MHz bands.

The regulator has done away with the overall cap across all bands. It has tried to rationalize the spectrum cap by recommending one of 40% on combined spectrum holding in the sub-1 GHz bands, and in 1800MHz, 2100MHz, 2300MHz and 2500MHz frequency bands, as well as in the individual bands of 3300-3670MHz and 24.25-28.5GHz.

Payment terms

TRAI suggests payment over 30 years, flexibility of moratorium and part payment. This, if approved, will come as a relief to the industry, which has been demanding flexibility.

"For the long-term growth and sustainability of the sector, infusing liquidity and encouraging investment, the telecom service providers should be allowed easy payment options including part payment with the flexibility of moratorium," said the recommendations.

TRAI sets out two options for payment. The first is a full or partial upfront payment of the bid amount within ten days of declaration of the final price.

Based on the amount of partial upfront payment, the government will offer a moratorium of a proportionate number of years to the service provider. They will then need to pay the balance in equal annual installments over the remaining period following the moratorium.

The second is 30 equal annual installments of the bid amount, with the first installment to be paid within ten days of declaration of the final price.

The private networks angle

There is ongoing conflict between service providers and enterprise regarding the allotment of 5G spectrum for private networks. Telcos are keen that all spectrum is auctioned, while enterprise wants to acquire spectrum from the government at nominal administrative rates.

TRAI recommends "all options" for the uptake of captive wireless private networks, which opens doors for businesses to acquire spectrum directly from the government.

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Companies can set up a private network through telecom service providers using network slicing – or they can ask operators to establish an independent private network on their premises using service providers' spectrum.

They will also have the option to obtain spectrum on lease from service providers or acquire it directly from the government. The government will need to earmark spectrum to be assigned directly to businesses.

TRAI also recommends setting up a "very light touch online portal based regime for acquiring permission/license" for private networks.

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— Gagandeep Kaur, contributing editor, special to Light Reading