Niti Aayog bats for reduced 5G spectrum prices

If the union government follows Niti's Aayog's advice, telecom companies may be able to obtain 5G spectrum at a lower cost. The think tank of the government, which advises it on various matters, has recommended that operators be awarded spectrum for a 30-year period, with a reserve value equal to what the Telecom Regulatory Authority of India (TRAI) has determined for a 20-year period. As a result, the price cut within the  reserve value turns out to be 36 lower than what the regulator had thought of in 2018.

The recommendation holds significance since Niti Aayog's CEO is a member of the Digital Communications Fee, the most effective policy-making body on telecom-related issues. The DCC is an inter-ministerial body that includes officials from the finance ministry and the division for business and internal trade, in addition to senior executives from the division of telecommunications.

Analysts in the telecom industry believe Niti Aayog's advice is sound and must be taken into consideration by the government. The 36 percent reserve value discount works out to a 20-year period, but TRAI has added a stipulation that if the spectrum is given for a 30-year period, the price charged should be 1.5 times the 20-year period.

Because the government had decided last year in September to supply spectrum over a 30-year period, Niti Aayog says that there is no reasoning for computing a value for 20 years  and the adding multiples to it.

Furthermore, there is no cost saving  compared to  that in 2018, if the multiple is included. According to the reserve value calculated by Trai for a 20-year period , operators must pay Rs 37,292 crore for the minimum quantum of spectrum required for a 5G network. If they are charged 1.5 times, over a 30-year period, the total comes to Rs 55,938 crore.  This price isn't a bargain when compared to the price set by the regulator in 2018, which was estimated to be around Rs 50,000 crore for the same amount of spectrum.

To tackle the problem, the DoT  committee has proposed that operators be given the option of purchasing spectrum for 20 to 30 years. According to analysts, this provision is merely a compromise that contradicts a previous policy decision by the central government that spectrum should be auctioned for a 30-year period in the future.