The government is gearing up for the auction of one lakh MHz spectrum and is hoping that 75 trillion. Telecom operators complain that the government’s price expectations are still too high, even though the government has reduced their floor prices for some bands by 35-40%. Even considering how low the base price for 5G spectrum auction may be between telecom operators and the government, it is possible to think that the way spectrum is allocated and used, each stakeholder would be better. Here is a suggestion.
The government should remove restrictions on eligibility for telecom operators and to-be operators to participate in spectrum auctions, and encourage telecom tower companies, infrastructure investment trusts, pension funds, insurance companies, private equity funds and others who manage a large pool of investibles. Capital to participate in the auction. Also, it should free up the system of spectrum trading and leasing, so that the purchase, sale and leasing of spectrum at any time for any period is eliminated by policy and regulations. The result would be opening up a new source of income for pension funds, maximizing profits for the government, reducing capital locked up in spectrum for operations by telecom companies, and optimum utilization of spectrum.
Ultimately, spectrum auction aims to make spectrum available to telecom operators, have a fair, objective criterion for allocating spectrum among alternative claimants to spectrum and generate as much revenue as possible for the government from allotting to telecom operators. . The spectrum they need. These goals will be met by the model we have suggested.
The current model of spectrum utilization, in which each telecom operator himself obtains long leases on spectrum for dedicated use, is inefficient both in terms of spectrum utilization and capital utilisation. Furthermore, it is technically obsolete, with the advent of the ability to hop spectrum bands into both handsets and base stations and use whatever band is available.
What can be the arguments against such opening up of the market for spectrum? One could be that telecom operators find themselves without spectrum if needed. There are two reasons why this is unlikely. The only way for the bulk holders of spectrum to generate revenue is by leasing it or selling it to a telecom operator. Continuing on spectrum will only result in loss of revenue for the spectrum holder, especially when he competes with other spectrum holders for customs. In addition, the secondary market for spectrum can be regulated to avoid hoarding and ensure fair competition.
Another possibility is that there could be a loss of revenue to the government. it’s unlikely. By adding spectrum holding and leasing companies to potential bidders, participation in spectrum auctions is being broadened rather than limited. If a telecom company wants to bid as much as it is planning to bid in the old model, nothing stops it from making such bids.
A third potential downside is that frequent trading and leasing of spectrum can increase the cost of spectrum for the telco and hence for the consumer. This is also not likely. For one, telcos are being saved from the capital cost in the acquisition of a dedicated spectrum. Furthermore, allowing a continuously variable choice of spectrum bands for use by telcos, will increase spectrum usage, and thereby reduce the cost of spectrum usage per call or data transfer.
Another possible argument is the loss of sovereign control over spectrum, should the successful bidders for spectrum have financial participation by foreign capital. This is a meaningless concern, as the spectrum available in India cannot be physically carried anywhere, and will always be available for use in India. India needs to put in place a legal framework that ensures its continued deployment, that’s all.
Will handsets and base station telecom kits that allow spectrum hopping, deploying technologies called cognitive radio and software-defined radio, be more expensive than traditional handsets? This is a concern that does not take into account the 10 or more drop in handset price over time in the case of feature phones, as technology evolved and smart phones came into existence. The same kind of technological development and adoption can be expected with equipment that incorporates new technologies. Mass markets, allowing for economies of scale, and continued development of technology, will combine in the framework of intense competition among telecommunications equipment and handset manufacturers to reduce the cost of handsets and other hardware.
If all this was indeed feasible, why haven’t other countries already adopted such a change? There is no reason why India should not be a leader in business processes and business models. From process innovation in medicine to outsourcing of telecom infrastructure services, freeing up telecom to focus on operations, branding and customer service, India has pioneered new ways of doing business. The point is to let go of unnecessary inhibitions and seize the day.