DoT Rejects TRAI's 55% Backhaul Spectrum Cost Cut; Airtel, Jio And Vodafone Idea Bear The Burden

Telecom operators hoping for relief on backhaul spectrum costs have been left disappointed.

Draft rules published by the Department of Telecommunications (DoT) on 17 June have kept the existing pricing framework intact, setting aside a recommendation from the Telecom Regulatory Authority of India (TRAI) to cut charges by as much as 55%.

TRAI's Case For Lower Costs

TRAI had put forward a simpler, cheaper pricing model for backhaul spectrum. Under the regulator's proposal, operators would pay a flat 0.1% of adjusted gross revenue (AGR) per carrier, replacing the current slab-based system where charges rise progressively as operators add more carriers. For a company operating around five backhaul carriers, the reduction would have been roughly 55%.

The regulator's reasoning was straightforward. Lower costs would make it more viable for operators to build out backhaul links, particularly in geographies where laying fibre is difficult or expensive. Better backhaul coverage translates directly into improved network quality for end users.

Old Framework Stays In Place

The draft Telecommunications (Administrative Allocation of Spectrum) Rules, 2026, did not take up TRAI's pricing recommendations. The existing structure, under which the first carrier attracts a charge of 0.15% of AGR with subsequent carriers becoming progressively more expensive through a weighted-average formula, has been preserved. It was not immediately clear whether the draft rules are open to further consultation or revision.

Backhaul spectrum connects telecom towers to the core network and has grown in strategic importance as operators roll out 4G and 5G infrastructure at scale. Industry voices have long argued that backhaul should be treated as an essential network input rather than a commercial spectrum resource, and priced accordingly.

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Pressure Mounts On Network Economics

The decision lands at a difficult moment for the sector. Telecom companies like Airtel, Vodafone Idea and Reliance Jio are all in the middle of significant capital programmes covering standalone 5G networks, fibre deployment and general capacity expansion. Carrying higher backhaul costs through this cycle puts additional pressure on network economics.

TRAI had also recommended that radio backhaul spectrum across multiple bands, including 6 GHz, 7 GHz, 13 GHz, 15 GHz, 18 GHz, 21 GHz, E-band and V-band, continue to be assigned administratively rather than through commercial auctions under the Telecommunications Act, 2023. The DoT's draft rules did not signal a departure from administrative assignment, though the pricing disagreement remains the more consequential outcome for operators in the near term.

Sources:

The Economic Times

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