Last week, telecom minister Ravi Shankar Prasad said that India would complete the much anticipated 5G auctions by 2019 end or early 2020. Amidst this, Broadband India Forum, a think tank focused on digital transformation, has written to the government stressing on the need for a reasonable reserve price and adequate spectrum to a successful 5G auction and thereby curtailed losses to the country.
Research done by the think tank has concluded that in the last six auctions since 2010, only 60 percent of the spectrum put up for auction was sold, predominately due to high reserve prices in previous auctions and legacy issues. In the last auctions held in October 2016, which was India’s largest spectrum sale, more than 1300 MHz of radio spectrum (approximately 59 percent) remained unsold.
Speaking to CNBC-TV18.com, TV Ramachandran, President of BIF, stressed on the need for a successful auction for economic benefit. “Every unsuccessful mobile spectrum auction has severe implications not only in terms of spectrum remaining unsold but also in terms of valuable economic benefit lost as a result of this unsold spectrum remaining idle. Successful auction doesn’t necessarily mean 100 percent. It could be 80-95 percent as well” he said.
The research by BIF outlines that India had 762 million active mobile connections in 2016, served by over 3800 MHz of spectrum allocated to licensees. This indicates that the idle spectrum with government could enable connectivity for roughly 278 million additional active connections. 278 million active connections correspond to 21 percent of the total Indian population.
“If 10 percent increase in tele-density leads to an increase of 1.9 percent in GDP (applying the results of the ICRIER India specific economic impact study), the financial cost of this idle spectrum can then be estimated to be Rs 5.40 lakh crores, or over 160 percent of the financial benefit of Rs 3.30 lakh crores from all spectrum auctions so far;” says TV Ramachandran. \
“Due to our very high reserve prices in past auctions, we have accumulated huge unsold spectrum and thereby lost to the nation and the public as much as Rs 5.40 lakh crores and consumers have lost out on quality of services. The socio-economic relevance of the technology and of such a figure is significant, especially for a nation like India, which is aspiring towards a Digital India paradigm. It is also important to take note that this estimated increase in national GDP is over and above the increase that accrues to the national exchequer in exchange for the rights to use radio spectrum. ” he adds
In this light, Broadband India Forum believes that it is critical for all stakeholders to come together and asses the upcoming 5G auctions. It outlines that the quantum of 5G spectrum that has been allocated for the upcoming 5G spectrum auctions is not enough for a country of India’s size and density. The amount of spectrum being made available for 5G in India is 175 MHz, which is almost half of the USA. Additionally, the present 5G Reserve Price (3.5 GHz band) at Rs 492 crore/MHz is also significantly in deviation with international norms.
In absolute terms, the recommended reserve auction price is 5 to 6 times higher than other countries. “Instead of just comparing the absolute prices, we need to look at the same relatively and compare them on the revenue generating potential of spectrum in different countries, i.e. in terms of ARPU adjusted USD cost per MHz per population, which is considered a more appropriate benchmark for Telecom for country wide spectrum price comparisons. 5G spectrum price in India is about 4 times higher than in UK and South Korea in terms of ARPU, and 8-9 times more than in Spain and Finland.
On an average, India 5G Spectrum Price is four times higher as compared to other countries. Both these problems pose a significant challenge to the efficient and effective 5G uptake in the country going forward:’ adds RamachandranRamachandran also adds that BIF is fully supportive of government’s efforts towards the 5G auction and wants to assist in enabling the successful launch and eventual completion of the 5G auction.