The recently concluded spectrum auction was a success, says RS Sharma, Chairman of the Telecom Regulatory Authority of India (TRAI).
Noting that telecom operators had often blamed lack of spectrum for poor service quality, TRAI recommended all spectrum available be auctioned to end the scarcity, he said in his first interaction with CNBC-TV18 after the auction.
"The quantum of spectrum this time was large. Whatever telcos wanted to buy has been bought," he said.
He says there is a healthy ecosystem around 700 megahertz (MHz) band and telcos' plea there is lack of a proper ecosystem is incorrect, he says. Over 40 countries have deployed 700 MHz band; it would have developed faster here if telcos acquired it, he added.
Below is the transcript of RS Sharma’s interview to Prerna Baruah on CNBC-TV18.
Q: How would you evaluate the recently-concluded spectrum auctions?
A: A lot has been written about the spectrum and actually it is not the TRAI which conducts the spectrum, it is the government of India. TRAI makes the recommendations relating the pricing, gives the price suggestions and which spectrum to be auctioned. So, in my view it was a successful auction and whosoever, whichever operator wanted to buy whatever spectrum bands, they did buy and then whatever they did not want to buy, they did not buy.
One of the basic reasons where we had recommended a whole lot spectrum which you call mega spectrum to be made available to the telecom service providers (TSP) was that generally, when we talked about quality of service, one of the reasons which is often quoted by the TSP is that because we do not have spectrum, therefore we are not able to provide good quality of service.
Now we did not want that to come in the way and we said whatever spectrum we have got, let it be put to auction so that at least now onwards, the operators will not have that as an excuse, because my view is that spectrum is important in the quality of service recipe in some sense. But that is not everything. Nevertheless, why should we leave that open also. So, that is basically the way it is. In my view, whatever, whosoever wanted to procure, buy, they have done so.
Q: To your point, that telcos dealt very cautiously this time around and only bought spectrum where it was a necessity to plug the gaps in terms of providing 4G and 3G. But to talk specifically on the 700 MHz band, it is a band of very superior propagation characteristics, but they have given it a miss. But of course, this did not come in as a surprise because telcos did time and again make this concern that the reserve price was perhaps too steep. Talking about the pricing, do you believe now that perhaps the pricing was very steep or perhaps as the government or the minister has been saying that maybe they did not have the required financial strength?
A: Let me not make the comment on other issues. I will comment on the pricing. We had a full-fledged consultation with all the stakeholders regarding pricing of various spectrum bands. And during those consultations also, people did point out that it was a wonderful band, has usage, great propagation characteristics and some people called it a diamond. And whatever pricing and computations and modelling which we have, whatever tools we have, we applied all the tools and there is a way to come at the reserve price recommendation. And we have gone by those methods and we gave that recommendation.
Everytime a spectrum auction takes place, there are reserve prices which are given by Telecom Regulatory Authority of India (TRAI) and auction does take place and in my view, because the quantum of spectrum this time is very large, as you say, mega spectrum, whatever he telecom companies (telco) had to buy have been bought and that is how it is.
Q: But Rs 11,500 crore per MHz for a pan India company would have to splurge nearly Rs 56,000 crore to get a block of 700 MHz. Do you not think that is a little high?
A: The prices of any commodity are determined by competition. I do not know what is your estimate of the reserve price or what according to you should have been the right price. So, we had gone through that process and we had given our recommendation which in our view is the best recommendation for the price. So, people may disagree and obviously, somebody may say it is very high, somebody may say it is very low or whatever, but we had gone by a method and that method is very transparent. In our recommendations to the government, we have actually given all the reasons as to why we are giving this reserve price for every band.
Q: Authority suggested that about 13 countries have already auctioned in the 700 MHz band and that the device ecosystem is very rapidly developing. But the telecom operators currently are also seeing that the ecosystem is not developed and they do not want to splurge in big bucks to develop that kind of an ecosystem at this point in time.
A: As far as the ecosystem is concerned, we have already, as you say clarified in the consultation paper which was issued. You see this is a very healthy ecosystem, a number of countries have deployed 700 MHz. Yesterday, I came across a paper from GSMA which is actually the industry body representing GSM operators and this is dated October 13. And they have said that there is a very healthy ecosystem developed in 700 MHz. So, they have themselves given a very categorical statement to the fact that there is no problem of ecosystem. So, if somebody is saying that there is no ecosystem developed, that is not correct, number one.
Number two, let us also realise, India is the second largest telecom market after China. And if we do not develop, it is a chicken and egg situation. There is already a healthy ecosystem developed, that is why we put that 700 MHz for auction and found some takers, probably the ecosystem would have developed faster. So, ultimately, when you start using a spectrum, then only more device manufacturers will start manufacturing devices and ecosystem is developed at that time.