Govt may reduce reserve price for 700MHz; history will repeat itself: experts

In 2012, when the government could not sell the 800MHz put up for auction, the then Communications Minister, Kapil Sibal, had said “Of course there will be an auction”. Auction, he did, after reducing the reserve price to almost half. The net result was all the airwaves were sold within a few hours.

History may repeat itself for the 700MHz band too, according to many industry veterans and analysts whom BusinessLine spoke to. They feel that reducing the reserve price of the band can only help government generate more money from the auctions.

The government, together with the Telecom Regulatory Authority of India (TRAI), have to see the feasibility of reducing the prices of the 700MHz, and the industry can wait till then.

“Government will find no takers if spectrum are priced beyond a limit. Industry is not hungry for spectrum right now and they would bid only if the reserve price of the 700MHz is aligned with the 800MHz,” said an industry expert.

He said the 700MHz was just given a ‘premium’ tag which led the authorities to price it higher. But, it was so high that the industry had already decided much before the auctions that they will not bid for it.

“Many say that new technologies can be run on the 700MHz band only, but that is incorrect. Many future technologies can be used even on 800MHz, 900MHz, 1800MHz and so on. And, for technologies like 5G, higher bands (above 5GHz) are required (surpassing much beyond 700MHz),” he said.

Better revenues According to him, more the spectrum provided at ‘affordable’ rates, more buyers would come, government would get better revenues, and ultimately consumers will benefit at the end of various services.

“If the 700MHz was optimally priced and put it on the table, companies would have bought it. Spectrum holding by the government is depriving the consumers to use more data services,” he said adding that government is only lacking in en-cashing from such airwaves.

As the 700MHz band is efficient for long-term evolution (LTE) and effective from data usage point of view, with the growth of data and video, sooner or later, it is likely to attract investors, Hemant Joshi, Partner, Deloitte Haskins & Sells LLP, said.

Hinting at the recent auctions, he said, “Market appears to have determined that the pricing of 700MHz band was not attractive despite the fact that it is highly efficient and effective for LTE deployment. The clear focus on 4G spectrum has come out.”

Once the data tsunami hits the country, analysts expect the 700 MHz to be critical to cater to 4G requirements and rational reserve price will play an important role to drive uptake.

“The introduction of the band is a really good endeavour to scale up the 4G play, but may take at least 2-3 years to be adopted,” Prashant Singhal, global telecom leader, at EY, said.

Sufficient capacity The operators have sufficient capacity and dense networks in urban/semi-urban regions to cater to the demands using 1800/800/2300/2500 MHz band for a couple of years, he added.

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