Telecom and Postal Sector – Spectrum Allocation, Call Drops, Predatory Pricing, etc

Government earnings from the spectrum auction

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Telecom Spectrum

Mains level : 5G technology and its rollout

The end of India’s first auction of telecommunications spectrum in five years was held with the government generating revenue of ₹77,815 crores from the exercise.

What is Spectrum?

  • Devices such as cellphones and wireline telephones require signals to connect from one end to another.
  • These signals are carried on airwaves, which must be sent at designated frequencies to avoid any kind of interference.
  • The Union government owns all the publicly available assets within the geographical boundaries of the country, which also include airwaves.
  • With the expansion in the number of cellphones, wireline telephone and internet users, the need to provide more space for the signals arise from time to time.

Spectrum allocations

  • Spectrum refers to the invisible radio frequencies that wireless signals travel over. The frequencies we use for wireless are only a portion of what is called the electromagnetic spectrum.
  • To sell these assets to companies willing to set up the required infrastructure to transport these waves from one end to another, the central government through the DoT auctions these airwaves from time to time.
  • These airwaves called spectrum is subdivided into bands that have varying frequencies.
  • All these airwaves are sold for a certain period of time, after which their validity lapses, which is generally set at 20 years.

How has the industry been since the last auction?

A lot has changed in the industry since 2016 when the previous auction took place.

  • In the last few years, there has been a consolidation in the industry, as a result of which there are only a few major players now.
  • While the user base has grown, the industry itself has witnessed unforeseen financial stress in the form of an important court case against it.
  • The reference is to the Supreme Court verdict last September that ordered telecom players to share revenues coming from even non-telecom services with the government.
  • It gave telecom companies 10 years to pay their Adjusted Gross Revenue (AGR) dues to the government, with 10% of the dues to be paid by March 31, 2021.

Try this question for mains:

Q.What are the various challenges faced by India’s telecom before the upgradation to 5G technology?

What about the 5G rollout?

  • The auction for 5G is likely to happen later.
  • In the auction that was held last week the government offered spectrum for 4G in the following bands: 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz.
  • The “king” in 5G, the C-band, which is the band between 3,300 MHz and 4,200 MHz, was not on offer in this round of auctions.

How did this auction compare to the last round?

  • In 2016, about 40% of the 2,355 MHz of spectrum (at a reserve price of ₹5.6 lakh crore) was sold, giving the government ₹65,789 crores in revenue.
  • This time, the Centre has managed to get more.
  • The government said the revenue generated by the auction has exceeded its expectations, which was about ₹45,000 crore.
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