Established telcos like Bharti Airtel and Idea Cellular have asserted that there can be no case for holding spectrum auctions or even its consultation process in the prevailing scenario where the industry has been bruised by falling revenue and high levies Newcomer Reliance Jio, however, said the auction schedule may be drawn up at the discretion of the regulator and the government, but that long-term visibility is imperative for advanced planning to be undertaken by telcos. Also Read - Jio maintains lead in 4G download speed, Vi in upload in May: TRAI
Jio said the telecom department should provide a forward-looking timeframe for availability of spectrum for the next 10 years across multiple bands. The Mukesh Ambani company has also strongly argued in favour of doing away with the 50 percent in-band spectrum cap, saying it has lost relevance as auctioned spectrum is now technology neutral. Also Read - Jio Freedom Plans 2021: Jio launches 5 new prepaid plans with no daily data limit - check details
On the valuation of spectrum, Jio has suggested that reserve price should be reduced by 50 percent across all spectrum bands. In its written submission to the Telecom Regulatory Authority of India (Trai) consultation paper on spectrum auction, Bharti Airtel has said an “opportune” time for holding the sale of airwaves would be the end of 2018-19. The consultation process on auction and pricing of spectrum should be initiated between September to December 2018, when operators are better placed to assess their future needs, it added.
“We believe, if the auction is conducted in the near future, then it would not result in the realisation of full value of proposed spectrum put to auction,” Airtel has said.
Idea too has said timing for the consultation is “inappropriate” and that there is no business case for the acquisition of any more spectrum, considering the current industry scenario of “below-cost pricing” and “hyper competition”. Flagging the industry’s “extreme financial stress”, Idea has lamented that operators, as it is, are finding it difficult to fund even existing spectrum payments and the “business case made out earlier for the spectrum won in previous auctions has already failed”.
India’s largest telecom operator Airtel has said the Spectrum Usage Charges (SUC) have added substantial financial burden on the industry reeling under Rs 4.5 lakh crore of debt. It has urged the regulator for reduction of SUC charge to a uniform 1 per cent of revenue across all the spectrum bands.
Noting that there had been no takers for the 700 MHz band in the 2016 auctions given its “abnormally high” reserve price, Airtel further said value of this band should be kept equal or lower than the price of 800 MHz band spectrum this time around. It has also recommended that the present intra-band spectrum caps of 50 percent should be maintained and also extended to new bands on the block like 3300-3400 MHz and 3400-3600 MHz.
The company said that having 50 percent cap has been effective in preventing a monopoly situation in any band and boosting competition. Notably, Trai in a separate exercise is also reviewing the existing spectrum caps – 50 percent within a spectrum band and 25 percent overall across all bands – applicable on telcos. Vodafone, which is in the process of merging its India operations with Idea Cellular, has emphasised that timing of auctions should take into account the financial situation of the industry and the ongoing consolidation, but stopped short of specifying a timeframe for sale of airwaves.
“The deteriorating financials also raise the question of whether the industry is either willing or able to acquire spectrum at this juncture,” Vodafone has said. Both Airtel and Vodafone have said that Trai should not immediately prescribe any rollout obligations for 3300-3400 MHz and 3400-3600 MHz — bands that are being put on the block for the first time for mobile services and where the standards, network and device ecosystem are still evolving.