India's ‘Short-Term Gain, Long-Term Pain’ Approach to Spectrum Pricing Needs to End, says GSMA

Taking a cue on the upcoming auction of India's 700 MHz band spectrum, John Giusti, Chief Regulatory Officer, GSMA commented on the Telecom Regulatory Authority of India’s (TRAI) recent recommendations for spectrum pricing. He has suggested that India's ‘Short-Term Gain, Long-Term Pain’ approach to Spectrum Pricing needs to end soon.

“The GSMA is very concerned by TRAI’s recommendation to set a starting price of US$1.7 billion per MHz for pan-Indian 700MHz spectrum. India has one of the lowest Average Revenues Per User (ARPU) across the world (US$2.45 at the end of 2015). Combined with so far limited revenue contribution from data services, competitive pressure on operators’ revenues and high capital expenditure to upgrade networks, this makes it more challenging for operators to recover from high spectrum prices. Spectrum’s greatest value does not come from high sales prices, but rather from its use to expand social and economic opportunity for all India’s citizens. In 2014 alone, the mobile industry contributed 6.1 per cent to India’s GDP.

“The more mobile operators have to pay for a spectrum licence, the less capital is available to roll out new mobile networks. As the digital economy becomes increasingly important to India’s future prosperity, we encourage greater focus on the long-term benefits of connecting more people in India to affordable mobile broadband, rather than on short-term financial gain.

“High reserve prices and an unrealistic predetermination of spectrum value could also reduce the willingness of potential bidders to buy the spectrum. For example, in Australia, an unrealistically high reserve price resulted in a valuable portion of the 700MHz spectrum left unsold and unused. Unused or under-utilised spectrum benefits neither the economy nor society.

“We respectfully ask the Indian Government and TRAI to keep in mind the objectives for releasing 700MHz spectrum – one of the most promising bands to expand the reach of mobile broadband services into rural areas – in the lead-up to auctioning this critical spectrum resource. Setting reserve prices at reasonable levels will be key to achieving the Digital India objectives, allowing operators to focus their resources on building the necessary infrastructure to deliver high-quality mobile services for Indian citizens.”