Govt’s failure to sell 700MHz band means customers will have to wait longer for world class internet services

While the whole country is shopping online for the best deals around the festive season, Indian telecom operators too are busy buying airwaves at the biggest sale of airwaves ever in the country. All major telecom operators including Airtel, Reliance Jio, Idea and Vodafone are trying to fill the gaps in their networks and boost their coverage across the country by lapping up airwaves. Day three of spectrum auction has come to an end but no one’s buying 700MHz band, the premium LTE band that is being auctioned for the first time in India and the premium band that is finding no takers.

Firstly why is the 700MHz band so popular? It sure has some pretty good reasons to be popular, as data market grows popularity of data bands is definite and the 700MHz band is one of the best data frequency band out there. While the ecosystem for 700MHz is still non-existent but the band can be the best bet for data connectivity in the future. And most importantly with its propagation, 700MHz band can reduce the cost of setting up network by a massive 70%.

You would think there are enough reasons for telecom operators to stock up on this premium band but that is the exact opposite of what is happening in the ongoing spectrum auction. The LTE band remains untouched and unsold. The main reason for the premium band being left unsold is the premium pricing it comes at. The telecom regulator TRAI calling it an “uncut diamond” priced 700MHz band at a whopping R11,485 crore per MHz. Telecom operators whined about the high prices and even the telecom department’s plea to the TRAI for a rethink on the pricing went unheard. Which meant the 700 MHz band even if sold at minimum price would fetch govt over Rs. 400,000 crore that translates to 70% of govt’s earnings from the current auction and the expected earnings from 700MHz is higher than all spectrum auction clubbed together since 2010. Clearly, the govt went for all or nothing and looks like the govt is getting nothing.

While it’s a dent in terms of govt’s inflows from spectrum auction but it also means customers will have to wait a little longer for world class internet service. In 2010 when ‘4G spectrum’ (2300MHz) was being auctioned for the first time the reserve price was kept low as the govt did not see interest for the band and the 4G ecosystem much like the 700MHz ecosystem now was yet to take form. That’s also the time when Reliance Jio won 4G spectrum across the country at throw away price and recently launched its 4G services in the country. Another time when the govt put the 800MHz band under the hammer in 2012 telcos stayed away quoting ‘too high pricing’ for the spectrum band and the reserve price for 800MHz band was eventually cut by half.

We are not certain if the 700MHz band will see a similar fate like the 800MHz band or if the govt will slash the base price of the premium LTE band or if the progress on the growth of ecosystem will hit a roadblock. But one thing is certain that the consumers will have to wait much longer for world class internet service.

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