Telecom majors raise concerns over steep spectrum pricing, ask govt for relook

Telecom operators in India have reiterated that there is a need for the government and the Telecom Regulatory Authority of India (Trai) to take a relook at the current spectrum pricing to make it affordable for operators to roll out services and also improve the health of the industry.

Highlighting that the revenues of the operators are under pressure and that the ARPUs (average revenue per user) are much lower today compared with how they were in times of 2G, Bharti Airtel chief regulatory officer Ravi Gandhi said, “In 4.4 MHZ network of 2G, the ARPUs were in the range even higher than the ARPU of today.” He said it is important that the revenue potential that the operators would earn through that spectrum be kept in mind while deciding on the spectrum pricing.

“While speeds are going up, latency is going down, customers are provided more and more data and services but proportionately the revenues are also falling,” he said, addressing an industry conference held by Broadband India Forum on Thursday.

Gandhi added the he does not see any spectrum need, especially for 5G in the current context, when the technology is evolving and bands are being re-farmed. “Bands used for 2G are now being used for 4G,” he said. Given that the requirement of infrastructure will be 5-10 times for 5G rollout compared with the current network requirement for telecom services, Gandhi also emphasised on the need for sharing of network among operators.

“If we have to create infrastructure which is 5-10 times of the current infrastructure, the industry will need more capital and there is no point in creating parallel capital if it can be shared between the operators,” he said.

The operators also highlighted that the government needs to relook at the spectrum usage charges, licence fees and how they need to be factored in while coming up with spectrum prices. Also, operators should not be charged for unused spectrum.

The industry’s concerns come at a time when the spectrum auction is expected to be one of the largest so far, with close to 8,300 MHz of airwaves expected to go under the hammer for an estimated total base price of nearly Rs 6 lakh crore. The telcos have been voicing their concerns against the high prices, especially for the 5G band, amid high leverage and stressed earnings.

Meanwhile, the telecom commission has asked Trai to reconsider the prices again. Reliance Industries senior V-P VL Shankar emphasised the affordability of services, if 5G is to become a reality. “Ultimately, what is going to drive growth is the affordability of the device which has to be the smartest at the lowest cost. Second, service has to be priced lower, and to do that, base price has to be lower,” he said.

India’s largest telecom operator Vodafone Idea said affordability is crucial to provide hassle-free experience for consumers. Rajesh Singh, executive vice-president (radio technology planning), Vodafone Idea, said,

“Provisioning of harmonised, contiguous, interference free 5G spectrum at reasonable price will enable service providers to direct more investments towards enhancing network capacities and capabilities, provide seamless connectivity and enhance customer experience”.