Parliamentary Panel expresses concern on high spectrum price, delay in 5G rollout in telecom sector

Expressing concern over high spectrum price, a Parliamentary Panel on Wednesday asked the government to pay due attention to the issues raised by telecom operators and take steps for early rollout of the 5G services.

The Standing Committee on Communications and Information Technology, chaired by Lok Sabha MP Shashi Tharoor, in its report expressed concern about the 5G rollout delay that will deprive the country of taking advantage of various benefits of 5G when other countries of the world have made noticeable progress in the deployment of the technology.

"It is high time that 5G should be rolled out in India in some specific Use Cases, however, the Committee do not see any progress in that direction. The Committee, therefore, reiterates that the Department need to review all their policies relating to 5G so that the country is not left behind in the race for 5G," the panel said in the report.

The panel said that it desires that the Telecom Regulatory Authority of India (Trai) may be impressed to expedite their recommendations on the 5G spectrum so that the 5G auction can be held at the earliest.

The panel noted that the pricing of the 5G spectrum in the country is exorbitantly high as compared to other countries in the world and there is a need to review the spectrum pricing by taking into account factors such as per capita and ARPU (average revenue per user) in the country.

As per December 2021 quarter financial reports, VIL had reported ARPU of Rs 115, Bharti Airtel Rs 163 and Reliance Jio Rs 151.6.

"The Committee had recommended the Department to look into the issue of high spectrum price and come out with a convincing spectrum pricing policy that is sustainable, affordable and acceptable to all," the panel report said.

Telecom industry body COAI had informed the panel that Trai had recommended Rs 492 crore per megahertz as a reserved price for spectrum in 3300 MHz to 3600 MHz for 5G, which is far higher than the auctioned spectrum price in other countries.

The panel was informed that a comparison of unit pricing of the 5G spectrum with other countries indicates that it is 7 times costlier than the UK, 14 times costlier than Australia, 35 times costlier than Spain and 70 times costlier than Austria.

Bharti Airtel has informed the panel that the price recommended by Trai is exorbitantly high and ranges from 3-70 times of the market-determined price of the spectrum in other countries in absolute terms and is 16 times of the price in relative terms.

"The concern of the Committee is that price of the spectrum in the country should not become so unsustainable that it may have a long term negative impact on the telecom sector as a whole. Considering the stress in the telecom sector, high spectrum price will have a detrimental effect on TSPs to fully roll out 5G in the country. The Committee reiterate that the concerns of the TSPs with regard to spectrum pricing in the country are given due attention," the report said.

The panel also recommended that the concerns raised by COAI for rationalisation of levies and duties in the telecom sector should also be given time bound consideration by the government.

COAI had submitted before the panel there is a need for rationalisation of levies and duties in the telecom sector, such as providing soft loans against GST import line credit due to operator, reducing spectrum usage charge by 5 per cent and license fees from 8 to 3 per cent.

"The Committee are, however, concerned to note that no action has been taken by the Department and Trai on the above recommendation of the Committee," the report said.

The panel has asked the Department of Telecom, in coordination with Trai, to make sincere efforts to address the concerns raised by the industry players so that the financial burden of telecom operators neither acts as a deterrent in their move towards 5G nor places an unsustainable burden on the Indian customers.