Modi 3.0 government: Telcos seek lower spectrum prices and eased rollout obligations

  • The industry has sought doing away with minimum rollout obligations which will enable telcos to use spectrum resources more judiciously.

Gulveen Aulakh
First Published12 Jun 2024, 08:15 PM IST
The previous spectrum auction had fetched the government a record  <span class='webrupee'>₹</span>1.5 trillion.
The previous spectrum auction had fetched the government a record ₹1.5 trillion.

As the new government takes charge, India's telecom industry has highlighted concerns over high spectrum prices, urging regulatory intervention to bring costs in line with global standards and remove minimum rollout obligations. The Cellular Operators Association of India (COAI) contends that these changes would allow telecom companies to use spectrum resources more efficiently.

“Despite making huge investments for 4G/5G rollout, telecom service providers in India are still among those with the lowest average revenue per user (Arpu) in the world. India's spectrum costs as a proportion of annual recurring telecom revenues are much higher than key global markets such as China, Germany, the UK, Brazil, or even neighbouring Pakistan,” said the COAI, citing research firm CLSA. “In this context, we urge Trai (Telecom Regulatory Authority of India) to revisit the spectrum pricing recommendation, in line with global norms.”

The plea comes as the telecom department gears up for the next round of spectrum auctions starting 25 June, which will include 4G and 5G spectrum.

Auctions were postponed twice due to the Lok Sabha election. The previous spectrum auction had fetched the government a record 1.5 trillion.

Read This: Spectrum auction prices are still too steep

Looking ahead, COAI has also urged the government to strategically plan the allocation of 6 GHz resources for future 6G networks. “To achieve the mission of 6G through initiatives such as Bharat 6G Alliance and Bharat 6G Vision, the industry needs massive spectrum resources which can deliver the higher capacity required by 6G,” the association said.

Telcos and OTTs

COAI’s director general, SP Kochhar, emphasized the need for regulatory action amid concerns that large traffic generators or over-the-top (OTT) players heavily utilize telecom networks without contributing to the costs.

“The rapid surge in data over telecom networks has put tremendous pressure on telecom networks, leading to severe quality of service (QoS) issues and drastically impacting TSPs’ customer experience. We feel this is a clear case of exploitation as the massive investment and efforts of the TSPs are being siphoned off by these service providers,” Kochhar said.

Kochhar explained that the issue is not with smaller players, startups, or MSMEs, whose traffic generation is minimal compared to large OTTs. These OTT services consume large amounts of data, and the revenue they generate from subscriptions and advertisements is repatriated to their parent countries.

“This causes a huge loss, estimated to the tune of 10,000 crore, to the government exchequer. This is expected to increase further in the coming years, especially with the emergence of newer AI (artificial intelligence) applications and technologies such as video optimization on OTT streaming platforms,” Kochhar added.

Challenges and recommendations

COAI highlighted the growing problem of telecom equipment theft, which has increased significantly over the past few months. 

“There are several legal and technical challenges that make it difficult for them to recover the stolen equipment or to fully recover the loss. The impact of this is huge as it leads to poor QoS to end customers and significant financial loss for the TSPs,” the association noted.

Additionally, the association stressed the need to make 1200 MHz of the 6 GHz mid-band spectrum available for expanding 5G networks, as the earlier allocation of 800 MHz was insufficient. According to a recent GSMA report, India could save as much as $10 billion annually in 5G network deployment by using the 6 GHz spectrum, COAI said.

COAI also pointed out the challenges associated with testing and certification of telecom manufacturing equipment, essential for ensuring the safety and security of 5G infrastructure. The association praised the government's Production Linked Incentive (PLI) scheme for telecom and networking products, worth 12,195 crore, and its amendment to include a design-led manufacturing scheme with additional incentives of over $533.33 million.

Also Read: From the ashes of defunct telcos, there’s space for a new operator to rise

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First Published:12 Jun 2024, 08:15 PM IST
HomeIndustryTelecomModi 3.0 government: Telcos seek lower spectrum prices and eased rollout obligations

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