The Telecom Regulatory Authority of India’s proposal to cut the reserve price of spectrum for the upcoming auction by nearly 40 per cent is a tacit admission of the fact that holding on to unsold airwaves actually leads to massive revenue loss. But this realisation comes far too late in a market that has shrunk to just a couple of serious bidders.
The days when spectrum auctions could be designed primarily as revenue-maximising exercises are long gone. Ever since the Centre raked in a windfall during the 3G auction in 2010, spectrum sales have been treated as a fiscal bonanza. Collections of nearly ₹1 lakh crore created the impression that airwaves were a reliable cash cow for the exchequer. Operators fearful of missing out on the 3G wave bid aggressively. Subsequent auctions were then calibrated with the same mindset; reserve prices were kept prohibitively high, often divorced from market realities. The result was predictable. Since 2010, elevated reserve prices recommended by the regulator have led to repeated auction failures, with large chunks of spectrum lying unsold.
The 2016 auction was a case in point. Of the 2,354 MHz of spectrum worth ₹5.63 lakh crore put on the block, bids were received for only 965 MHz, garnering ₹65,789 crore. More than 60 per cent of the spectrum remained unsold. The regulator was blamed for misreading market sentiment while fixing reserve prices. Yet the pattern persisted. In 2024, less than 25 per cent of the offered spectrum was sold, with the Centre achieving only 12 per cent of its revenue target. This is not surprising. Consolidation has reduced the number of major private operators to three. Multiple auctions, spectrum trading and sharing arrangements have ensured that operators already hold substantial airwaves. The incentive to hoard spectrum for future use has diminished, more so at unattractive prices.
High spectrum costs hurt consumers, as it compels operators to raise tariffs or defer network investments. Spectrum is a national resource, but monetising it inefficiently helps neither the exchequer nor citizens. The steep corrections in key bands underscore how inflated past pricing was. In the 900 MHz band, considered among the most efficient for mobile broadband, the reserve price for Delhi circle, for example, has been slashed to ₹327 crore per MHz compared to ₹750 crore per MHz in 2015. The 700 MHz band has seen an even more dramatic reset. In Mumbai, for instance, the reserve price has fallen from ₹1,595 crore per MHz a decade ago to ₹443 crore now, after repeated failures to attract buyers. The opportunity cost of idle spectrum is foregone revenue and delayed connectivity. India must move away from a rigid annual auction calendar towards a dynamic, demand-driven spectrum marketplace. Operators should be able to procure airwaves as needed, with competitive bidding only when multiple entities seek the same block. Such a framework would align India with global best practices.
Published on March 3, 2026