Telecom spectrum auctions see little competition. Regulator proposes a fix

“Apparently, the concern of the Department of Economic Affairs is to ensure effective competition in the auction process,” the Telecom Regulatory Authority of India (Trai) said in a consultation paper released on Tuesday. Stakeholders have until 28 October to submit their feedback.

Spectrum sale is shaped by market forces as well as various economic and technological factors, such as demand for telecom services and the number of bidders participating in the auction, according to the regulator. A higher number of bidders leads to greater bidding intensity, increasing the possibility of the spectrum being sold at a higher auction-determined price compared to the base price, Trai said.

Auctioning spectrum or radio waves that carry mobile signals, internet, and TV is a key source of government revenue. Aggressive bidding for spectrum has eased since 2021, with most of the airwaves sold near reserve prices—a shift driven by industry consolidation, high base prices, and the financial burden of recent 5G rollouts, according to an analysis by V.J. Christopher, wireless advisor at DoT.

The Department of Economic Affairs, while approving the auction results for the auction in 2024, had asked the telecom regulator to examine the demand and supply dynamics and explore the possibility of enhancing competition and mitigating oversupply of spectrum.

In the upcoming spectrum auction, Trai is looking at bringing in spectrum in bands of 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz for auction. Besides, it also plans to put 6 GHz, 1427-1518 MHz, as well as 37-40 GHz bands on the block.

A total of over 12,000 MHz of spectrum is currently unsold in the traditional bands, in addition to the quantity of spectrum that will be brought under new bands, according to data shared by the department of telecommunications (DoT) with Trai.

Spectrum went unsold

India’s telecom market has also become a duopoly dominated by Reliance Jio Infocomm Ltd and Bharti Airtel Ltd, with a 75% share by subscribers, pushing Vodafone Idea Ltd to the margin.

Meanwhile, beleaguered Vodafone Idea awaits relief from the government on its staggering adjusted gross revenue (AGR) dues worth over ₹83,400 crore. On 18 September, Vodafone Idea filed a revised petition in the Supreme Court seeking a waiver of penalties and interest on AGR dues. This came after the company on 8 September filed a fresh writ petition in the Supreme Court challenging an additional demand of ₹9,450 crore by the Union government towards AGR dues.

Besides financial health and investment capacity of the bidders, the amount of spectrum acquired in previous auctions also shapes the spectrum demand, Trai said, adding that reserve price alone is not the decisive factor in determining actual demand.

In the June 2024 auction, a total of spectrum worth ₹96,238.45 crore was put on the block. Of this, 141.40 MHz of airwaves worth only ₹11,341 crore were sold at the reserve price. The ministry of communications said that no bidding took place in the 800 MHz, 2300 MHz, 3300 MHz, and 26 GHz bands because the monetization of the 5G spectrum auctioned in 2022 was still in progress.

In 2022, the carriers had acquired spectrum worth over ₹1.5 trillion of ₹4.3 trillion worth of airwaves on the block, ahead of the 5G launch.

According to Trai’s consultation paper, another method could be to establish an enabling regulatory framework for reducing entry barriers for access service providers so that new entities may also consider obtaining licence/authorisation and participate in the spectrum auction.

Earlier, too, the regulator had recommended allowing other service providers to participate in the auction, but the government did not implement some of its suggestions.

On the contentious 6 GHz band (6425-6725 MHz and 7025-7125 MHz), the regulator has also sought comments on whether pilot trials should first be conducted to know how far telecom base stations should be so that they do not interfere with satellite uplink stations. This band remained unsold in the previous auction owing to a low device ecosystem.

Focus on better services

The regulator’s 44 questions have sought inputs on spectrum valuation and reserve price calculation, terms of making payments, the quantity of spectrum in various bands to be brought for auctions, and the need for modifications in the minimum spectrum roll-out obligations to improve mobile coverage in the country, among other things.

On 16 September, Mint reported that the plan to tighten the service rollout obligation is currently under consideration, and the carrier may soon be required to ensure actual, usable mobile coverage—particularly along highways, railway routes, and sparsely populated areas that frequently suffer from weak or no signal.

“The Authority has received complaints from consumers about no mobile coverage on certain patches of highways and train routes, certain pockets of residential and commercial areas, and certain segments of rural and remote areas. Besides, in the drive tests conducted by Trai, the issue of no mobile coverage at numerous places has come to the notice of the Authority.” Trai said in the consultation paper. It would be worthwhile to deliberate as to whether there is a need to modify the approach followed by the government in terms of spectrum rollout obligations in public interest, Trai said.