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The value of 1800MHz and 2100MHz spectrums in India and implications for auction design

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  • Prasad, Rohit
  • Kathuria, Rajat

Abstract

The sequence of events leading up to the upcoming auction of 1800MHz spectrum in India has led to the auctions acquiring an extraordinary significance for the future of the Indian mobile industry. A key feature of the auction design proposed by the regulator TRAI is the benchmarking of the reserve price of 1800MHz to the price of 2100 – 3G spectrum revealed in the 2010 auction. In the context of the low number of LTE devices available and the fragmentation in the 1800MHz band, this paper proposes reducing the duration of spectrum holding to ten years (from the current level of twenty years), and calibrating the reserve price of 1800MHz with its value with GSM deployment. An economic model is used to compute the value of startup and incremental 1800MHz spectrum. The estimated values are shown to differ from the value of 2100MHz spectrum at a pan-India level and also in their distribution across circles. A new set of reserve prices are computed based on the estimation. The estimated values are also shown to be close to the AGR-adjusted price revealed in the 2001 auction. A reserve price based on the 2001 auction is also provided. Concomitant features of the auction are suggested to give coherence to the auction design.

Suggested Citation

  • Prasad, Rohit & Kathuria, Rajat, 2014. "The value of 1800MHz and 2100MHz spectrums in India and implications for auction design," Telecommunications Policy, Elsevier, vol. 38(3), pages 223-235.
    • Handle: RePEc:eee:telpol:v:38:y:2014:i:3:p:223-235
    DOI: 10.1016/j.telpol.2013.08.003
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    References listed on IDEAS

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    1. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
    2. Isabelle Huault & V. Perret & S. Charreire-Petit, 2007. "Management," Post-Print halshs-00337676, HAL.
    3. Prasad, Rohit & Sridhar, Varadharajan, 2009. "Allocative efficiency of the mobile industry in India and its implications for spectrum policy," Telecommunications Policy, Elsevier, vol. 33(9), pages 521-533, October.
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    Cited by:

    1. Prasad, Rohit, 2015. "The production function methodology for estimating the value of spectrum," Telecommunications Policy, Elsevier, vol. 39(1), pages 77-88.
    2. Rana, Md Sohel & Prasad, Rohit & Yoon, Hyenyoung & Hwang, Junseok, 2020. "Opportunity cost of spectrum for mobile communications: Evaluation of spectrum prices in Bangladesh," Telecommunications Policy, Elsevier, vol. 44(3).
    3. Jain, Rekha & Dara, Rishabh, 2017. "Framework for evolving spectrum management regimes: Lessons from India," Telecommunications Policy, Elsevier, vol. 41(5), pages 473-485.

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