India considering a reverse spectrum auction

India's Department of Telecom is reportedly considering a reverse auction model for the nation's next spectrum sale.

An official at the department told the Economic Times that a reverse auction is being considered in order to raise proceeds from the sale of bandwidth while avoiding further adding to the financial strain on the telecoms industry.

Under this model, the department may put up all spectrum bands for auction, and the frequency range that does not elicit any bids would automatically see a price reduction until a floor cap is reached. At this point that bandwidth would be pulled out of the auction.

According to the source, the industry is divided on the need or desire for more spectrum auctions. Some including newcomer Reliance Jio support an auction of 4G and 5G spectrum in India's current financial year at prices recommended by the regulator.

But others are seeking a reduction in prices and only support the auction of 4G spectrum in the current financial year, or do not want any auction until 2020.

The industry is already grappling with heavy debts caused in part by the high cost of previous spectrum auctions. This as well as the disruptive entry of Reliance Jio into the market caused some operators to pull out of the market altogether, as well as one bankruptcy and a wave of consolidation.

The proposed reverse auction model would mark an attempt to alleviate these issues while setting the market's remaining operators up for further growth, the report states.

The source added that the department is also considering adopting annual reverse spectrum auctions. That way any spectrum left unsold in one auction could be put back up for sale next year.

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