Spectrum

Indian Economy glossary

Also called: Radio-frequency spectrum · Topic: Infrastructure: Transport, Communications and Energy · NCERT: Beyond NCERT

Meaning

Spectrum (radio-frequency spectrum) is the range of radio frequencies (invisible electromagnetic waves) that carry wireless signals: mobile calls and data, broadcasting, satellite links and defence communication. In India it is a scarce public resource owned by the nation. The Central Government (DoT) assigns it, mainly by auction and sometimes administratively, and TRAI only recommends the terms and pricing.

It matters because spectrum is the raw material of the telecom industry. How it is priced decides three things: how much money the government earns, whether operators can stay in business, and how fast services like 5G reach people.

Explanation

How spectrum works and why it is scarce

  • Frequency bands. Spectrum is divided into bands, measured in hertz (MHz, GHz). Each band is given to one user in one area so that signals do not clash.
  • Scarce, but never used up.
  • Two users on the same frequency in the same area cause interference (signals jam each other). So only one user can hold a band at a time.

  • Spectrum is never consumed. But spectrum left idle today earns nothing and serves no one, and that lost use cannot be recovered later.

  • Different bands suit different jobs (settled textbook physics):

  • Lower bands, such as 800 MHz, travel far and pass through walls. They suit wide rural coverage.
  • Higher bands carry more data but cover a shorter distance. They suit crowded cities and 5G.
  • IMT bands are bands set aside for mobile services.
  • Microwave backhaul spectrum (E-band, V-band and others) links towers to the core network. It is a key input for 5G rollout.

How spectrum is assigned

  • Auction (the default) under the Telecommunications Act, 2023.
  • Operators bid against each other, and the spectrum goes to whoever values it most.

  • Reserve price is the minimum price at which bidding opens.

  • Administrative assignment (no auction) is used for listed uses: defence, satellite services and BSNL/MTNL.

  • Secondary market. Under the 2023 Act, the Centre allows spectrum sharing, trading, leasing and surrender, subject to prescribed terms and fees. This lets an unused band move to an operator who will use it.

What operators pay

  • Upfront auction price: the winning bid.
  • Spectrum usage charges (SUC): a recurring charge calculated on adjusted gross revenue (AGR), the revenue base on which operators also pay the licence fee.
  • Licence fee: 8% of AGR, including a 5% USO levy (USO means universal service obligation, the duty to provide telecom everywhere, including remote areas).

What decides whether spectrum sells or sits idle

  • Reserve price set too high: the spectrum goes unsold.
  • Government revenue is zero, and rollout gets delayed.

  • Example: the 800 MHz band found no buyer in the November 2012 auction. It sold to a single bidder in March 2013, but only after the reserve price was cut by half.

  • Reserve price set too low: the government gets less than the true value of a national resource.

  • Indexation (raising the reserve price each year to cover inflation). TRAI's 2025 advice is:
  • where spectrum went unsold last time, reuse the old reserve price without indexation;

  • where spectrum did sell, raise the price with indexation.

  • Operator finances. If operators carry heavy debts, such as AGR dues, they bid less in auctions.

In India

  • Constitution: wireless and broadcasting fall under Union List entry 31, so spectrum is a Central subject.
  • Law: the Telecommunications Act, 2023 is now the parent law for spectrum. It repealed the Indian Telegraph Act 1885 and the Wireless Telegraphy Act 1933.
  • Who does what:
  • DoT (Ministry of Communications) assigns spectrum and has the final say.
  • TRAI (set up under the TRAI Act, 1997) gives recommendations under Section 11(1)(a) when DoT refers spectrum terms and pricing to it. These recommendations do not bind the government. DoT can send them back through a back-reference (a formal note asking TRAI to reconsider).
  • TDSAT decides disputes.

  • CAG (Comptroller and Auditor General) audits how spectrum is managed.

  • Recent TRAI work:

  • Recommendations on infrastructure sharing, spectrum sharing and spectrum leasing (24.04.2024). DoT sent a back-reference, and TRAI replied to it.
  • Recommendations on spectrum terms and pricing for satellite-based commercial communication (May 2025), on a DoT reference of July 2024.
  • A consultation paper on microwave spectrum in the 6 GHz (lower), 7, 13, 15, 18 and 21 GHz bands, the E-band and the V-band (May 2025).

  • Recommendations on auctioning spectrum in IMT bands (2025).

  • CAG findings:

  • DoT did not auction 800 MHz spectrum for EVDO (an older mobile-data technology) in 2010, even though TRAI had advised an auction. CAG estimated about ₹9,626 crore in lost upfront charges. DoT disputed this estimate.
  • Spectrum surrendered by Tata Teleservices was not re-auctioned in many circles. CAG valued the lost use at about ₹127.33 crore a year.

  • A large quantity of idle spectrum was found in IMT bands (CAG Report No. 2 of 2022).

  • Rollout: 5G was launched in October 2022.

  • AGR history:
  • The Supreme Court's October 2019 ruling put non-telecom revenue into AGR, creating dues of about ₹1.5 lakh crore.
  • The September 2021 relief package redefined AGR prospectively, gave a 4-year moratorium on dues and allowed 100% FDI through the automatic route.

Don't confuse with

  • Licence / service authorisation: an authorisation is the legal permission to provide a telecom service. Spectrum is the radio resource that service runs on. An operator needs both, and each is paid for separately.
  • Licence fee vs spectrum usage charges: both are calculated on AGR. The licence fee (8%, including 5% USO) is paid for the authorisation. SUC is paid for using the assigned spectrum.
  • Auction vs administrative assignment: auction is the default under the 2023 Act. Administrative assignment, with no bidding, is only for listed uses such as defence, satellite services and BSNL/MTNL.
  • Spectrum sharing vs trading vs leasing: in sharing, two operators use their spectrum together. In trading, the right to use the spectrum is sold to another operator. In leasing, it is rented out for a period and the original holder keeps it. All three need the Centre's permission and fees.

Prelims Hooks

  • Under the Telecommunications Act, 2023, auction is the default way to assign spectrum. Administrative assignment applies to defence, satellite services and BSNL/MTNL.
  • Trap: "TRAI allocates spectrum." FALSE. The Central Government (DoT) assigns it. TRAI only recommends, under Section 11(1)(a) of the TRAI Act.
  • AGR is the base for the licence fee (8%, including 5% USO) and for spectrum usage charges.
  • Reserve price is the minimum price at which bidding opens. The 800 MHz band went unsold in November 2012 and sold in March 2013 only after its reserve price was halved.
  • TRAI's 2025 advice: for spectrum unsold last time, keep the old reserve price without indexation.
  • The 2023 Act repealed the Indian Telegraph Act 1885 and the Wireless Telegraphy Act 1933. Wireless is in Union List entry 31.

Mains Points

  • Revenue vs rollout.
  • A high reserve price protects government earnings but leaves spectrum idle.
  • Idle spectrum earns nothing and delays 5G. The 800 MHz case and CAG's 2022 idle-spectrum finding show this.
  • TRAI's 2025 rule (no indexation where spectrum went unsold) is an attempt to balance the two.

  • Link this to the AGR stress: when operators are short of cash, they bid less, and the auction raises less.

  • Who should decide.

  • Spectrum is tied to national security, and pricing a national resource is a political choice. That supports keeping the final decision with the elected Centre.
  • But the Centre owns BSNL/MTNL and gives them spectrum without an auction. It also sets spectrum terms for their private rivals.
  • DoT can send back TRAI's advice with no deadline and no public reasons, which weakens TRAI's check on this conflict.

  • A fair middle path: DoT must give written reasons within a fixed time when it rejects TRAI's advice, as a 2011 parliamentary committee view suggested.

  • Using spectrum more efficiently. Sharing, trading, leasing and surrender, early re-auction of surrendered spectrum, and proper assignment of backhaul and satellite spectrum help get more out of a scarce resource. They also support digital inclusion and the last mile (BharatNet, Digital Bharat Nidhi).

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