Trai stands by its Rs 3,050-cr fine on telcos

NEW DELHI|MUMBAI: The telecom regulator has rejected the proposition of the Digital Communications Commission (DCC) to reduce the `3,050-crore penalty that the watchdog had recommended against Bharti Airtel and Vodafone Idea. It’s also set to reject the telecom department’s suggestion to reduce the 5G spectrum reserve price, underlining the differences between the Telecom Regulatory Authority of India (Trai) and the DCC on critical issues. A senior official at the Department of Telecommunications (DoT) told ET that Trai had said, “We stand by our recommendations (on the penalties).” The matter will now go back to the DCC, the highest decision-making body in the DoT.The companies are being penalised for denying points of interconnect to Reliance Jio Infocomm back in 2016. ET had reported on June 28 that Trai was set to reject the DCC’s call, saying there was no provision for the regulator to lower the penalty in the absence of any specific DoT guidelines on graded penalties for violations. On 5G pricing, senior Trai officials said the regulator was unlikely to back down and will stick to the suggested price of Rs 492 per MHz for the 5G band of 3300-3600 MHz, which the industry has termed exorbitant and unsustainable, likely resulting in a failed auction.“If any spectrum goes completely unsold, that is when historically the regulator has any case for reducing the prices,” a senior official told ET. Officials in the DoT, which is sending a reference back to the regulator seeking a reduction in 5G rates, believe prices need to be lowered, keeping in mind the financial health of the industry. The telecom regulator is set to stand by its suggested rates for the bandwidth, which will be sold for the first time in spectrum auctions.“The regulator has to listen to industry’s demands,” a senior DoT official told ET. “What they will send is just the recommendation — these won’t be their final views.” He added that that the final decision on 5G pricing will be taken by the government. Another official said reserve prices needed to be cut in order to ensure a successful rollout of 5G. “We want the 5G rollout to happen,” he said. “Industry is very clear that they can’t afford it at these rates and we will need to listen to them.”But Trai feels that 5G technology won’t be restricted to telecom players and has widespread use in industry. “Look at Germany,” said an official. “The government has reserved as much as a third of available 5G spectrum for industrial use for companies such as Volkswagen and Siemens who wish to use it for wireless automation and establishing their own 5G networks.”The authority is of the view that if telecom companies do not buy 5G airwaves, the government should keep the airwaves for other companies that might use it better.“Spectrum is no longer going to be a resource only for telecom companies going forward,” the official said. “That opportunity of this technology must reflect in the price. It is very important for the overall economic and digital growth of the country.” Trai officials rejected the contention that the pricing would make India’s 5G airwaves the most expensive in the world.“In South Korea and Italy, spectrum is given for a period of 10 years,” one of them said. “In India, it’s for 20 years. Secondly, the industry conveniently leaves out the fact that the price of spectrum which they quote in these countries is per MHz per million population, which means that Italy is the size of one Andhra Pradesh, not the entire country. Obviously, the pan-India price will take many such countries into consideration. The moment you include that parameter, we are not expensive.”India also offered options such as staggered payment, which other countries don’t have, he said.While the price of spectrum in India in absolute terms is high, when computed on the basis MHz per population, the reserve price — when compared with rates in Italy, South Korea, Australia, UK, Austria and Spain — are the lowest in the world, according to CLSA. Italy is most expensive at $0.42 per capita, while India is at $0.05, based on the reserve price.Officials added that Trai had already reduced the price of certain bands by over 30% in its recommendations last year.Trai last year slashed the base price of premium 4G airwaves in the 700 MHz band by almost 43% and set Rs 492 crore per unit as the minimum rate for 5G spectrum. Sale of the entire Rs 8,500-crore MHz of airwaves available across the country at the recommended reserve price may fetch the government more than Rs 5.9 lakh crore. Auctions are expected to be held at the year end.

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