GSMA concerned over spectrum auction pricing in India

NEW DELHI: London-based global mobile operators'lobby group, GSM Association (GSMA) feels high spectrum pricing in the forthcoming auction of the 700MHz band may impact participation of companies in India.

A week ago, The telecom regulator Telecom Regulatory Authority of India (TRAI) has released its recommendations for spectrum price for the 2016 auction.

“TRAI has issued its recommendations on valuation and reserve price of spectrum in the 700 Mhz, 800 Mhz, 900 Mhz, 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 Mhz bands,” telecom regulator said.

“The GSMA is very concerned by TRAI’s recommendation to set a starting price of US$1.7 billion1 per MHz for pan-Indian 700MHz spectrum. India has one of the lowest Average Revenues Per User (ARPU) across the world (US$2.45 at the end of 2015). Combined with so far limited revenue contribution from data services, competitive pressure on operators’ revenues and high capital expenditure2 to upgrade networks, this makes it more challenging for operators to recover from high spectrum prices. Spectrum’s greatest value does not come from high sales prices, but rather from its use to expand social and economic opportunity for all India’s citizens. In 2014 alone, the mobile industry contributed 6.1 per cent to India’s GDP3," John Giusti, Chief Regulatory Officer, GSMA.

“The more mobile operators have to pay for a spectrum licence, the less capital is available to roll out new mobile networks. As the digital economy becomes increasingly important to India’s future prosperity, we encourage greater focus on the long-term benefits of connecting more people in India to affordable mobile broadband, rather than on short-term financial gain," he said.

“High reserve prices and an unrealistic predetermination of spectrum value could also reduce the willingness of potential bidders to buy the spectrum. For example, in Australia, an unrealistically high reserve price resulted in a valuable portion of the 700MHz spectrum left unsold and unused. Unused or under-utilised spectrum benefits neither the economy nor society," he added.

“We respectfully ask the Indian Government and TRAI to keep in mind the objectives for releasing 700MHz spectrum – one of the most promising bands to expand the reach of mobile broadband services into rural areas – in the lead-up to auctioning this critical spectrum resource. Setting reserve prices at reasonable levels will be key to achieving the Digital India objectives, allowing operators to focus their resources on building the necessary infrastructure to deliver high-quality mobile services for Indian citizens," said Giusti.

“The base spectrum price per MHz for Delhi metro will be Rs 1,595 crore for 700 MHz, Rs 848 crore for 800 MHz, Rs 399 crore for 1800 MHz, Rs 554 crore for 2100 MHz, Rs 143 crore for 2300 MHz and Rs 143 crore for 2500 MHz band,” said TRAI.

The telecom regulator said that the base spectrum price per MHz for Karnataka (including Bangalore) will be Rs 740 crore for 700 MHz, Rs 303 crore for 800 MHz, Rs 558 crore for 900 MHz, Rs 185 crore for 1800 MHz, Rs 328 crore for 2100 MHz, Rs 98 crore for 2300 MHz and Rs 98 crore for 2500 MHz band.