Telecom companies in India are poised to receive significant financial relief as the Telecom Regulatory Authority of India (TRAI) is planning to slash backhaul spectrum fees by up to 50%. This decision is aimed at easing the financial burden on telecom operators and fostering a more robust and accessible telecommunications infrastructure.

Backhaul spectrum, which includes microwave access (MWA) and microwave backbone (MWB) frequencies, is used by telecom firms to connect cell towers. These radio frequencies are administratively assigned by the government. Currently, the charges for these airwaves escalate based on the number of carriers a telecom company has and are calculated as a percentage of Adjusted Gross Revenue (AGR) using a weighted average formula. The telecom industry spends approximately ₹4,000 crore annually on backhaul spectrum.

TRAI is considering reducing prices for MWA carriers by around 50% and fixing a low flat rate for MWB carriers. The recommendations from TRAI are expected in the coming days, and the Department of Telecommunications (DoT) will make the final decision.

The proposed reduction in backhaul spectrum fees is expected to benefit telecom operators and end-users. Cheaper backhaul spectrum can translate to more affordable and equitable access to telecom services. Moreover, it aligns with the government's broader digital strategy of lowering costs for telecom firms, improving rural broadband backhaul, and expanding the reach of 5G networks. A more rational and targeted spectrum pricing approach is expected to bridge the urban-rural digital divide and support the faster deployment of next-generation telecom infrastructure.

TRAI's move to overhaul the pricing structure includes replacing the existing revenue-sharing model with a pay-per-use, tower-to-tower pricing system. This aims to enhance pricing efficiency and align costs with actual usage. The proposed changes also involve pricing mechanisms for the E and V bands (high-frequency airwaves), which are crucial for 5G backhaul.

The review of backhaul spectrum pricing is especially beneficial for telecom operators like Vodafone Idea, which has a large number of backhaul carriers inherited from legacy networks. The current methodology results in higher spectrum charges for Vodafone Idea compared to Bharti Airtel and Reliance Jio.

TRAI's initiative to cut backhaul spectrum fees is a welcome move for the telecom industry, which has been facing financial strain. By reducing costs and promoting investment in infrastructure, this decision is expected to drive the growth of the telecommunications sector and facilitate the widespread adoption of advanced technologies like 5G.