by Suman Gupta
BIF urges government to Ensure Spectrum Adequacy and Reasonable Reserve Price for successful 5G Auctions
Eagerly awaiting DCC’s action towards an enabling policy decision for strengthening the country’s Digital India aspirations
Current reserve price of 5G Spectrum is too high – about 4 times higher than other countries when compared on ARPU adjusted cost per MHz per Pop basis and needs urgent revision
40% of spectrum since 2010 auctions has remained unsold
Economic impact of spectrum lost as a % of GDP (FY17)– 3.95%
New Delhi: Broadband India Forum (BIF), a think tank for Digital Transformation, highlighted that as a result of legacy issues, which includes unreasonably high reserve prices in previous auctions, India has incurred approximately INR 5.4 lakh crores (around US$ 756 Billion) in economic losses. Every unsuccessful mobile spectrum auction has severe implications not only in terms of spectrum remaining unsold but also in terms of valuable economic benefit lost as a result of this unsold spectrum remaining idle.
In the last auctions held in October 2016, which was India’s largest spectrum sale, more than 1300 MHz of radio spectrum (approximately 59%) remained unsold, leading to significant unrealized potential. Taking all the six auctions held since 2010 together, only about 60% of the spectrum put up for auction has been sold. Adopting a conservative approach, India had 762 million active mobile connections in 2016, served by over 3800 MHz of spectrum allocated to licensees. This indicates that the idle spectrum with government could enable connectivity for roughly 278 million additional active connections. 278 million active connections correspond to 21% of the total Indian population. If 10% increase in tele-density leads to an increase of 1.9% in GDP (applying the results of the ICRIER India specific economic impact study), the financial cost of this idle spectrum can then be estimated to be INR 5.40 lakh crores, or over 160% of the financial benefit of INR 3.30 lakh crores from all spectrum auctions so far.
The socio-economic relevance of the technology and of such a figure is significant, especially for a nation like India, which is aspiring towards a Digital India paradigm. It is also important to take note that this estimated increase in national GDP is over and above the increase that accrues to the national exchequer in exchange for the rights to use radio spectrum. Due to our very high reserve prices in past auctions, we have accumulated huge unsold spectrum and thereby lost to the nation and the public as much as INR 5.40 lakh crores and consumers have lost out on quality of services.
Economic Value Lost Due to Spectrum Lying Idle
Item |
Amount |
Tele-density gain as a percentage of total population |
21% |
Economic Impact of spectrum lost as a % of GDP (FY17) |
3.95% |
Economic value loss when applied to GDP |
₹ 5.4 lakh Crores |