Cabinet approves Auction of spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands, for a validity period of 20 years
By winning the right to use spectrum through the auction, incumbent telecom service providers will be able to augment their network capacity whereas new players will be able to start their services
The Union Cabinet on Thursday approved guidelines for the next round of spectrum auction which may begin in the last week of January, said Union Minister Prakash Javadekar.
"Cabinet approves Auction of spectrum in 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz frequency bands, for a validity period of 20 years. A total of 2251.25 MHz is being offered with total valuation of Rs. 3,92,332.70 crores, said Telecom Minister Ravi Shankar Prasad.
Prasad also said, "It's been 4 years since the last auction, conditions for the auction to be same as 2016." This means, notice inviting applications will commence this month. "We propose to hold auction by March 2021," he added.
India IT Minister said telecoms providers mandated to use new devices designated as trusted products and a national security panel on telecoms will be constituted.
By winning the right to use spectrum through the auction, incumbent telecom service providers will be able to augment their network capacity whereas new players will be able to start their services.
In the auction, bidders will have to comply with parameters/conditions e.g. block size in which bidders will be able to submit their bids, spectrum cap i.e. the maximum amount of spectrum that can be held by each bidder after the completion of the auction, roll-out obligations, payment terms etc, the Cabinet added.
Successful bidders may pay entire bid amount in one go (upfront) or may exercise an option to pay a certain amount (25% for spectrum won in 700 MHz, 800 MHz, 900 MHz bands or 50% for spectrum won in 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz bands) upfront and remaining amount in a maximum up to 16 equated annual instalments, after a moratorium of two years.
In addition to the bid amount, successful bidders will also have to pay 3% of the Adjusted Gross Revenue (AGR) excluding wireline services as spectrum usage charges for the spectrum won through this auction.
The Telecom Regulatory Authority of India (Trai) had recommended a plan to auction spectrum worth ₹5.22 lakh crore. However, some of the spectrum frequencies identified by the DoT for auction are being used by the defence ministry and the Department of Space.
The Department of Telecom (DoT) has identified 300 megahertz (Mhz) of spectrum blocks for 5G services. However, the defence ministry and Department of Space (DoS) have made claims for about 125 mhz of spectrum, leaving only 175 Mhz of airwaves for telecom companies.
Trai has recommended base price of proposed 5G spectrum in 3,300-3,600 Mhz band at about ₹492 crore per Mhz unpaired spectrum on pan-India basis. This comes to around ₹50,000 crore for 100 Mhz of 5G spectrum required to deliver 5G services.
The DoT has selected public sector firm MSTC for designing and developing spectrum auction software. However, due to claims of DoS and the defence ministry, the process of auction got delayed.
Spectrum auction is a transparent process of spectrum assignment to successful bidders. Sufficient spectrum availability increases the quality of telecom services for the consumers.
It is relevant that the Telecom Sector today is a key infrastructure provider with strong linkages with economic growth, direct and indirect employment generation and expansion of Digital India. Hence the above decision of the Cabinet is expected to have a salutary impact on all the aspects.