TRAI recommends auction of entire spectrum, proposes lower entry barriers and 35% cap

The Telecom Regulatory Authority of India (TRAI) on Tuesday recommended auctioning the entire available radiowave spectrum while proposing lower entry barriers for new players and a uniform 35 per cent spectrum cap to safeguard competition in the telecom sector.

Although TRAI has not officially disclosed the combined base price of the entire spectrum on offer, industry estimates suggest that if all spectrum across bands (excluding 600 MHz) is sold, it could fetch nearly Rs 81,000 crore at the reserve price.

Lower net worth criteria to encourage new entrants

Urging the Department of Telecommunications (DoT) to reclaim spectrum held by telecom companies undergoing insolvency, TRAI proposed halving the net worth requirement for new entrants from Rs 100 crore to Rs 50 crore per licensed service area. For Jammu and Kashmir and the Northeast, the requirement would be reduced from Rs 50 crore to Rs 25 crore.

All available spectrum across nine frequency bands should be put up for auction in the forthcoming bidding process, the regulator said.

Reserve prices and auction modalities

While reserve prices are lower than the 2022 auction levels for most Licensed Service Areas (LSA) and band combinations, some cases see higher prices than the previous sale. Industry sources noted that base prices for Jammu and Kashmir and the Northeast circles have been lowered.

In line with established norms, the reserve price for bands that remained unsold earlier has been fixed at 60 per cent of the last discovered price.

TRAI’s recommendations cover auction modalities, including reserve prices, band plans, block sizes, and associated bidding conditions. It also advised the DoT to immediately reclaim spectrum from insolvent providers and include it in the upcoming auction.

20-Year validity and 35% spectrum cap

Spectrum identified for International Mobile Telecommunications (IMT) should be auctioned on a Telecom Circle/Metro Area basis with a 20-year validity period. Eligibility conditions prescribed in the Notice Inviting Application (NIA) 2024 should continue for all frequency bands.

A uniform spectrum cap of 35 per cent has been recommended across low, mid and high-frequency bands, including 600 MHz, sub-1 GHz bands, 1800–2500 MHz bands, 3300 MHz, 26 GHz, and 37–40 GHz. Operators already exceeding the cap would not be required to surrender existing holdings.

600 MHz band: Longer validity and payment relief

To incentivise the 600 MHz band, TRAI suggested extending its validity to 24 years instead of 20. It also proposed a four-year moratorium on payments and a four-year delay in rollout obligations.

While spectrum charges would apply for 20 years, the validity would effectively extend to 24 years. Rollout obligations for the 600 MHz band would mirror those for other sub-1 GHz bands but would begin only after the initial four-year period.

In addition to the upfront payment option, an alternative payment plan with a moratorium has been proposed for this band.

Upper 6 GHz band reserved for IMT, no immediate auction

The upper 6 GHz band (6425–7125 MHz) has been reserved for IMT (mobile services) but will not be auctioned immediately. Instead, it will undergo technical trials to prevent interference with satellite uplink stations.

The frequency ranges 6425–6725 MHz and 7025–7125 MHz should not be auctioned in the forthcoming sale. The issue will be reconsidered after reviewing the outcome of WRC-27.

The telecom department may conduct coordinated trials involving all telecom service providers at 34 satellite uplink locations to determine necessary keepout distances for IMT base stations. The findings are to be shared with TRAI.

‘Coverage-for-Discount’ scheme to bridge digital divide

To bridge the digital divide, TRAI has proposed a “coverage-for-discount” scheme. Under this plan, successful bidders can offset up to 10 per cent of their spectrum auction costs by expanding services into government-identified coverage gaps within one year.

Telecom operators opting for the scheme would deploy new 4G or 5G base stations in designated “coverage holes.” Towers built under this incentive must be shared with competing operators at fair prices, ensuring residents in previously unserved areas gain access to multiple network providers.

Measures to strengthen competition

To promote competition, TRAI proposed reconsidering a separate wholesale Access Network Provider authorisation, expediting new infrastructure-related licences, and setting aside certain Time Division Duplex (TDD) spectrum for ISPs, M2M providers, and captive networks.

A fresh spectrum valuation exercise has been recommended every three years, with indexed auction-determined prices guiding interim auctions.

These recommendations pave the way for the next major spectrum sale, seen as critical for expanding 5G networks and strengthening digital connectivity across India.