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Issues in the Process of Spectrum Auction

Synopsis: The government should revisit spectrum auction formats, unrealistic pricing, regulatory norms.

Introduction

The telecommunications’ spectrum auction successfully held in India recently. The winning bids in the auction collectively outdid the government’s own low expectations for receipts from the sale of airwaves.

  • The three largest telecom service providers bought only essential airwaves. They bought it either as renewal or for strengthening their network.
  • Reliance Jio bought close to 60% of the spectrum. It contributed almost three-fourths of the ₹77,815 crores. Jio’s contribution of ₹57,123 crores by itself surpassed the government’s estimate of ₹45,000-₹50,000 crores from the auction.

However, the concerning fact is that only 37% of the airwaves on offer found buyers.

What are the issues in spectrum auctioning?

  1. Like the auction of the 2016 spectrum, the auction of 700 MHz this time also is not successful.  The high reserve price is a reason behind that. It prohibits buyers from auctioning with a motive of gaining from it.
  2. The 700 MHz spectrum is a nationally valuable resource. The government’s approach of keeping prices high is hard to understand.
  3. The relatively low frequency 700 MHz is considered ideal for enhancing network availability in large, densely built-up cities. Here, the issue of poor signal penetration inside buildings is an everlasting problem for users and providers.
  4. Other than that, the government needs to take care of the following issues:
    • The auction format requires updation, it is evident after looking at the severely reduced number of participants.
    • Regulatory norms and tax practices will create monopolies in the sector.

What are the steps to be taken?

The country’s telecom authorities shall reconsider the entire policy framework to tackle current persistent insecurity in the industry.

  • Firstly, Grossly unrealistic pricing of the spectrum should be rationalized.
  • Secondly, the government must ensure it does not end up hurting the telecom sector.  This sector has become a key multiplier of economic empowerment and progress.
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