Spectrum price in India is costlier than other nations

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The telecom regulator's proposed auction starting price for radio waves is exorbitant compared with what carriers in the West have paid in recent bids, an ET analysis using the average revenue per user (ARPU) data shows.

The Telecom Regulatory Authority of India's proposed spectrum prices may be close to what carriers in the US and Europe have paid in spectrum bids over the past two-three years, but when the ARPU is taken into account to work out the purchasing power parity of operators, Trai's prices on "a per unit per inhabitant basis" look steep.

The study used data released by Trai and global consultancy firm, Ernst & Young. Ofcom, UK's communications regulator, provided data on recent spectrum auctions in six other nations.

Calculations factoring in the ARPU variance suggest that India's 2G spectrum in the 1800 MHz band is 44 times costlier than the price discovered in Singapore last year. Similarly, Trai's proposed price for the 800 MHz spectrum is over five times higher than Germany, nearly 15 times more than Sweden, and almost 13 times higher than France.

The findings are seconded by Prashant Singhal, partner in member firm of Ernst & Young Global. "A comparison of the price recommended by Trai and that in select countries where auctions transpired in the last two-three years underlines the exorbitant nature of the proposed bandwidth reserve price in India," Singhal said.

According to data available with ET, Trai's price recommendation for 900 MHz spectrum would be 27 times higher than the price discovered in Spain last year, while 4G airwaves in the 700 MHz band would be 32 times costlier than US levels. Similarly, 3G airwaves in the 2100 MHz band would be 24 times more expensive than in Singapore.





THE MATH:

Last year, Singapore sold 2G spectrum in the 1800 MHz band at $0.9 million per unit. With a population of about 5.3 million, the price per unit per inhabitant works out to $0.16. This is only marginally lower than the $0.55 to $0.60 in India using Trai's reserve price.

However, analysts at Ernst & Young claim such a comparison is flawed, given the huge difference in per capita income, ARPU and consumption patterns in the two countries. Hence, the ARPU variance needs to be factored in to bring parity.

Since the ARPU in Singapore is $35, compared to $3 in India, it means a mobile user in Singapore contributes more than 11 times the revenue contributed by an Indian subscriber. Accordingly, the India spectrum price ($0.60) rises to $7.08 by applying the ARPU multiplier (Singapore ARPU/India ARPU), which in this case is 11.8. As a result, the real price per unit per inhabitant of 2G spectrum (post-ARPU adjustment) in the 1800 MHz band is about 44 times higher than the $0.16 in Singapore (See table).





Calculations show that the "per unit per inhabitant price" of Indian spectrum in the 800 MHz band (post-ARPU adjustments for each market) is 5.3 times higher than Germany's $0.95, nearly 15 times higher than Sweden's $0.54, and nearly 13 times higher than France's $0.90 (See table). Similarly, the 900 MHz bandwidth -considered the most efficient for 2G services - is 27 times cheaper in Spain at $0.46 per unit per inhabitant, compared with $12.49 in India as per Trai's recommendation.

In the case of 4G airwaves in the 700 MHz band, the proposed price in India works out to $38.88 per unit per inhabitant, which is 32 times higher than that in the US.


Read More : ET
 

shinystar

Newbie
Sterlite Tech has an expertise and experience for over more than 2 decades in the telecom services. Hence they are achieving a target of maintaining low cost and to give the data communication services at lower prices. The reason for the rise in Cost of Spectrum in India is because of the expenses incurred on laying the infrastructure of data cables from city to city.
Immense growth of telecommunication sector has increased its needs. Whereas there has been shortage of spectrum for growth of cellular services. SterliteTech in collaboration with the GOI is contributing towards the development of Smart City Project in India too.
 

shinystar

Newbie
Read the1st Post. It is about the layout of data cables and about making Smart City in India. the movement initiated by Modiji
 

Aviral Sangal

EntMnt Ambassador
Finest Member
Actually this happens when you go for auction. 2g spectrum was offered without auction and what we as consumers got was Damn cheap rates. If I remember correctly it was after the auction call rates were slashed and pulse was made per second even sms started costing much less.

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