TRAI's proposed price of 4G airwaves unrealistic, says GSMA

KOLKATA: London-based global mobile operators’ lobby group, GSM Association (GSMA) has voiced deep concern about the starting price of 4G airwaves in the coveted 700 Mhz band recommended by the telecom regulator, warning that “high reserve prices” and an “unrealistic predetermination” of spectrum value could “reduce willingness” of potential bidders to buy such airwaves.
“The GSMA is very concerned by the Telecom Regulatory Authority of India’s recommendation to set a starting price of US$1.7 billion (Rs 11,485 crore) per unit for pan-Indian 700MHz spectrum,” John Giusti, Chief Regulatory Officer, GSMA said Tuesday.

“An unrealistically high reserve price resulted in a valuable portion of 700MHz spectrum remaining “unsold and unused in Australia,” added Giusti.

Last week, Trai had suggested a starting price of Rs 11,485 crore for a unit of 700 Mhz spectrum, which translates to a whopping Rs 57,425 crore (or $8.5 billion approx) for a pan-India 5 MHz block.

According to him, “India has one of the lowest average revenues per user (ARPU) across the world ($2.45 at the end of 2015), and combined with limited revenue contribution so far from data services, competitive pressure on operators’ revenues and high capital expenditure to upgrade networks, this makes it more challenging for operators to recover from high spectrum prices”.

Spectrum’s greatest value, Giusti said, does not come from high sales prices, but “from its use to expand social and economic opportunity for all India’s citizens. In 2014 alone, the mobile industry contributed 6.1 per cent to India’s GDP.

“The more mobile operators have to pay for a spectrum licence, the less capital is available to roll out new mobile networks,” said the GSMA’s Chief Regulatory Officer.

“As the digital economy becomes increasingly important to India’s future prosperity, we encourage greater focus on the long-term benefits of connecting more people in India to affordable mobile broadband, rather than on short-term financial gain,” said GSMA in a media statement.

“We respectfully ask the government and TRAI to keep in mind the objectives for releasing 700MHz spectrum, one of the most promising bands to expand the reach of mobile broadband services into rural areas, in the lead-up to auctioning this critical spectrum resource,” said Giusti.

Setting reserve prices at reasonable levels would also be key to achieving Digital India objectives, said the GSMA, adding that it would allow operators to “focus their resources on building the necessary infrastructure to deliver high-quality mobile services for Indian citizens”.