Telcos should tank up spectrum, next sale may take long: DoT

Unsold spectrum after the auction will mean there is no demand for it, hence spectrum in all band will be harmonized, says telecom secretary J.S. Deepak

India’s biggest spectrum auction will begin at 10am on Saturday. Photo: Pradeep Gaur/Mint
India’s biggest spectrum auction will begin at 10am on Saturday. Photo: Pradeep Gaur/Mint

New Delhi: A day before India’s biggest spectrum auction begins, the government on Friday said telecom firms should “tank up” radio waves to bridge shortfall in their holdings as the next such sale may not happen for “quite some time”.

“After this auction we believe there will no spectrum shortage in India. This problem of spectrum scarcity affecting quality of service will be history,” telecom secretary J.S. Deepak told PTI.

Terming the auctions as a “great opportunity to tank up on spectrum”, he said not doing so will place operators at a competitive disadvantage.

The same opportunity in terms of the variety of spectrum that is being placed on the block will not come for quite some time, he added.

“After this auction if there is unsold spectrum, it means there is no demand for it... So we will harmonize spectrum purchased by operators in all bands including 1,800 Mhz (megahertz) and 2,100 Mhz so that we can make it contiguous and multiply its efficiency for operators. Only after harmonization process is complete, will we think of the next auction,” Deepak said.

India’s major telcos Bharti Airtel Ltd, Vodafone India Ltd, Idea Cellular Ltd and Reliance Jio Infocomm Ltd are among seven firm that are in the fray for the spectrum bidding. Other bidders include Reliance Communications Ltd, Aircel Ltd and Tata Teleservices Ltd.

As much as 2,354.55 Mhz of frequencies are being put up for auction in seven bands—700 Mhz, 800 Mhz, 900 Mhz, 1,800 Mhz, 2,100 Mhz, 2,300 Mhz and 2,500 Mhz. The radio waves being put up for auction can be used for 2G, 3G and high-speed 4G mobile services. This is more than the cumulative spectrum holding of the top four operators.

On the high cost of spectrum, Deepak said the industry “absolutely” has the paying capacity for buying it in the auction which starts at 10am on Saturday. This is the first time radio waves in the 700 Mhz band will be put up for auction and it is priced at Rs4 trillion at the reserve price.

However, the operators and analysts have said that the pricing in this band is too high. On pricing of 700 Mhz, the telecom secretary said since the spectrum in the band is top quality, it is expensive.

The price is high but it has its own advantage both in terms of propagation ability of spectrum and potential savings in capital expenditure, he added. “It is best for 4G, for indoor coverage, so it has its value. Those buying 700 Mhz spectrum have to spend a third of the amount on capex (capital expenditure) compared to 3G spectrum in 2,100 Mhz band,” he said.

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