The central government's goal of 'Digital India' has suffered a big jolt after the Digital Communications Commission (DCC), the decision-making authority at the department of telecommunications (DoT), accepted the 5G spectrum prices recommended by the Regulatory Authority of India (TRAI).

The auction for 5G, along with 4G airwaves, will be conducted in March-April as per the schedule. DoT secretary Anshu Prakash on Friday said that the department will go ahead with the auctioning of the spectrum of 8,300 megahertz at a reserve price of ₹5.23 trillion.

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A rickshaw puller speaks on his mobile phone as he waits for customers in front of advertisement billboards belonging to telecom companies in Kolkata .REUTERS/Rupak De Chowdhuri

After the DCC meeting, Prakash said, "The DCC has not reduced the prices from what was recommended by Trai...we expect good participation because the telecom operators do require spectrum, their services are expanding, their networks are expanding...there should be good competition in bidding. The Trai has given detailed reasons. So the DCC thought it fit to accept that. We are hopeful that the auction should be conducted in March-April."

Major setback for Telecom Industry

Although the DCC's decision will need approval from the union cabinet, if the auction is conducted per the current rates, there is a possibility that the telcos may not even participate, the reason being high pricing. The development has come as a triple trauma for the telecom industry which is already reeling under huge debt due to a price war started by the new entrant Reliance Jio. The Supreme Court's ruling on the definition of Adjusted Gross Revenue (AGR) was also a cause of it.

With the high base price of the 5G spectrum, the industry is now seeing an uphill task to ensure 5G in India. As per a report in financial daily Mint, the telecom industry body Cellular Operators Association of India (COAI) has argued that the spectrum reserve prices are four-five times more than the other countries where similar auctioning took place. Further, with already ballooning debt, it would be nearly impossible for the industry to raise funds.

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Now, with the high base price of the spectrum, the industry sees an uphill task to ensure 5G in India. (Representational Image)Reuters file

Rajan Mathews, director-general of COAI, said "It will be prudent to let the sector regain some financial strength from the recent initiatives undertaken before scheduling the auction for 5G. The interim period can be used to design and test India-specific 5G use cases." Interestingly, the development has come as a shock for the industry which was promised "reform in spectrum pricing" by telecom minister Ravi Shankar Prasad.

It is to be noted that the TRAI has recommended Rs 492 crores as the base price for per megahertz of 3,300-3,600 MHz band that is preferably the primary band for 5G services. In contrast, a similar band was put for auction in South Korea for a mere Rs 131 crores per megahertz.