India's telecom regulator has proposed a 40% cut in reserve spectrum prices as operator interest continues to evaporate. This dramatic reversal follows years of price increases that once generated massive government revenue. The most successful auction in 2022 raised Rs1.5tn ($17.9bn) with Reliance Jio emerging as the top bidder, a stark contrast to the mere Rs113bn collected in 2024.

The decline reflects consolidation within India's telecom sector, which has narrowed to two dominant players plus the struggling Vodafone Idea. Auction participation has plummeted, with the government selling less than a quarter of available spectrum in 2024 compared to 40% in 2016. The regulator now recommends all spectrum across nine frequency bands be auctioned at steep discounts, with the premium 900Hz band—most efficient for mobile broadband—seeing its reserve price halved even in major cities like Delhi and Mumbai.

While these moves acknowledge the failure of past pricing strategies, they fall short of the comprehensive overhaul needed. A more effective model would allocate spectrum based on actual demand rather than annual auctions. However, the government appears to have absorbed only partial lessons, with the telecommunication department reportedly considering a 5% levy on satellite communication spectrum despite regulators recommending 4%, potentially undermining this promising revenue source.