Who determines spectrum pricing for 5G in India?

There was a panel discussion on spectrum pricing for 5G.

Yi Shen Chan, Director, Plum Consulting, UK, spoke on spectrum pricing on 5G from a global perspective. The primary objective is to maximize the benefit to the society so there is an efficient distribution of resources, resulting in maximum benefits to the society. Pricing principles include:

* Spectrum should be allocated to the highest value use or users to ensure maximum benefit to society.

* Prices can be determined by market-based mechanisms or administratively by the regulatory authority.

* Transparency.

* In the absence of scarcity, prices should be set to recover costs.

5G is a steep change from the previous generations. It will get deployed over a range of bands -- low (sub 1GHz, mid (1-6GHz), and high (over 6GHz). Main focus today is on C-band (3.3-3.8GHz) and mm Wave bands (26-28 GHz) use.

Different approach for mmwave

C-band auctions see the wide recognition of the 5G economics and investment needed for network rollout. These are generally, lower auction reserve pricing, and so on. 5G goes beyond enhanced mobile broadband. The mm Wave may require different approaches. The mm wave spectrum is likely to merit a different approach. One is the uncertainty over its usage.

There are alternative forms of spectrum access. Wholesale network, dynamic sharing, involving geo-location databases, club model, eg., in Italy, spectrum brokerage, light licensing, etc. The objectives and principles of spectrum management and pricing are still relevant in the 5G era.

In pricing, everyone is right!

PK Sinha, Member Finance, Digital Communications Commission, spoke about the national perspective on 5G pricing in India. In pricing, everyone is right! The seller wants the maximum price. Some may want the maximization of revenue. Spectrum pricing is absolutely in your hands.

In India, the 5G spectrum is in 3300-3600 MHz band. It has been identified as the preferred band for roll out of 5G services in India. TRAI has a valuation methodology for the 5G band. TRAI has recommended that the reserve price of 3300-3600 MHz band should be 30% of the reserve price of 1800 MHz band.

The 1800 MHz band has been used as a reference point. Also, the 3300-3600 MHz band is unpaired. The reserve price is further halved. ICRIER has said that Indian reserve price for 5G spectrum by TRAI is much above the international standards. At the end of the day, the market will decide what is the best price. The economic value is dependent on scarcity.

Huge quantum of spectrum required

Parag Kar, VP Government Affairs, Qualcomm, asked what is it that we are trying to do with 5G? New services need a huge quantum of spectrum. On comparing the earlier auctions, it appears the price is at par. However, we won't get any efficiency benefit with 5G! It is similar to the existing technology. You need 100 MHz of spectrum. You needed lower quantum of technology for providing services in the earlier generations.

Vikram Tiwathia, DDG, COAI added that we need to be clear about what we want to do. A lot of brain went into NDCP 2018. The onus is on the government to provide the resource. India should leverage technology to rise in the global context. Spectrum has to be provided.

In terms of spectrum pricing, we need to review and come up with a fresh approach. 5G is supposed to catalyze the country to a higher plane. Those who have adopted 5G are countries that are already developed. What do the users really require out of 5G? That needs to be discussed as well.

Rajiv Prakash, Deputy DG, DoT, added that the background of spectrum pricing has evolved. People who take decisions on spectrum pricing are very conservative. The governance of the country has realized that spectrum is a valuable resource.

Rajat Mukarji, DG, BIF, noted that the Indian telecom industry is not doing really well. There are opportunities. 1300 MHz of radio spectrum remains unsold in Oct. 2016 auctions. That's 60% of what has been sold so far. It also means, we are not serving 21% of the population. The estimated cost of unsold spectrum is Rs 5.4 lakh crores in GDP.