The Telecom Regulatory Authority of India may have reduced the price of 5G spectrum in the 3,300-3,670 MHz by 36%, but some of the conditions attached may lead to a patchy rollout of this much-awaited service. The 3,300-3,670 band spectrum, though vital for high-speed data for 5G, is not a standalone spectrum band that is enough for operators to provide seamless services. There are a host of other bands which complement it. Unless the combined pricing becomes attractive, the operators are not going to buy the required quantum in one go. It’s exactly here that Trai has erred.

If one looks at the price of the 24.25-28.5 GHz spectrum band, referred to as the millimetre band that needs to bought along with the 3,300 Mhz band, the total outgo of an operator for a pan-India network works out to Rs 37,292 crore. This would not have been much of a problem had Trai not stated that this price is for a 20-year lease period for spectrum. The telecom reforms package announced by the government in September last year had said that in future, spectrum would be given for a 30-year period. By some queer logic, Trai has said that the price of spectrum for a 30-year period would be 1.5 times that of a 20-year period. This takes the amount an operator would have to fork out up to Rs 55,938 crore.

The issue is this: if the policy is to provide spectrum for a 30-year period, why calculate the price for a 20-year period and then add multiples to it? Even if the regulator wanted to show that it has reduced prices substantially, a better way would have been to say that the 20-year price would apply for a 30-year lease period. At Rs 55,938 crore, the price is hardly lower compared to the Rs 50,000-level in 2018. The other problem is the price of the 700 Mhz spectrum band, which is required for standalone 5G services for providing both voice and data services. The price here has once again been reduced by 40% at Rs 3,927 crore. A minimum of 5 Mhz would be needed by operators to build a network, so the total outgo would be around Rs 20,000 crore, and this is for 20-year period—for 30 years it would go up to Rs 30,000 crore.

Let us not forget that this spectrum has been put up for auctions twice in the past—2016 and 2021—and found no takers because of the high price. In fact, in 2021, its price was reduced by 43% from that in 2016. If this entire math of 3,300-3,600 Mhz, 24.25-28.5 Ghz, and 700 Mhz, which together make seamless 5G services possible, is done, the price works out to be astronomically high. Obviously, operators would do what suits them best in such circumstances: pick and choose—pick up spectrum in some bands and leave out other bands and wait for the next time when prices would be brought down further. While this would suit the operators’ budget and the government would have the satisfaction of saying 5G services have commenced, consumers will have to suffer patchy services.

To be fair, Trai certainly had constraints in reducing the reserve price beyond a point because it uses the last price as a benchmark. This is faulty methodology, but a total departure would have meant accepting the follies of the past. Perhaps the government, which has to take a final call in the matter, should step in and ensure that the pricing issue is solved in a manner that 5G does not remain just a nameplate service. The government should rise to the occasion to make sure that the reform process for the sector does not lose its purpose.