Indian task force says 5G spectrum is overpriced

Indian task force says 5G spectrum is overpriced

A task force appointed by India’s finance ministry has underlined what the country’s operators have already stated: that the 5G spectrum price suggested by India’s Department of Telecommunications (DoT) is too high.

For the upcoming auction of 5G airwaves, the DoT has suggested a base price in the region of $65 million per megahertz. This, says the taskforce is higher than the base price in a number of countries where 5G is already deployed.

According to Indian news reports, the finance ministry task force, in a report made public last week, recommended rationalising of prices in order to make next generation services affordable for all. To date, however, the DoT has stuck to the rates suggested by the Telecom Regulatory Authority of India (TRAI).

It’s not just pricing that is making operator outlay on 5G spectrum problematical. The task force also highlighted the ongoing AGR dues issue and the short time so far given to telecommunications companies to pay sums that, in some cases, amount to billions of dollars.

The report also raises the spectre of low demand for 5G spectrum in a highly consolidated sector with very few players. This could arguably get worse if Vodafone Idea’s debts rule it out of the bidding. Bharti Airtel has already said it will not bid for 5G spectrum at the price suggested.

The high prices might also undermine the country’s National Digital Communications Policy goals, making the provision of inclusive and affordable high-speed 5G services to all sections of the population (notably rural users) uneconomic. Infrastructure provision is another area where investment may be difficult for some operators.

The task force is no doubt right to argue that ‘robust’ participation in the 5G auction from private industry is an ideal outcome. But, at the present prices, can operators afford it?

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