View from India: 5G spectrum up for auction
Image credit: reuters
The Department of Telecommunications (DoT) will conduct the 5G spectrum auction on July 26. A total of 72097.85MHz of spectrum with a validity period of 20 years is being put up for the much-anticipated auction.
The bidders for the spectrum are Reliance Jio Infocomm; Adani Data Networks Ltd; Vodafone Idea Ltd, and Bharti Airtel Ltd. Reliance Jio has made an earnest money deposit (EMD) of Rs 14,000 crore. Adani Group has made EMD of Rs100 crore. Bharti Airtel has contributed Rs 5,500 crore as EMD, while Vodafone Idea has contributed Rs 2,200 crore. EMD is indicative of the quantity of airwaves a company can bid for in the auction. Looking at the deposit amounts, Reliance Jio appears to be bidding the most aggressively.
The auction will be held for spectrum in varying frequency bands. The low-frequency band is represented by 600MHz, 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz and 2300MHz; the mid-frequency band by 3300MHz, and the high-frequency band by 26GHz. Payments for the spectrum can be made in 20 equal annual instalments, each one to be paid in advance at the beginning of each year.
The bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance installments. Going by the Telecom Relief Package of September 2021, the government will only charge one-time spectrum fees. Spectrum usage charge (SUC) on any of the spectrum acquired in the 5G spectrum auction has been waived.
For the layperson, the spectrum auction involves multiple stakeholders: the seller, which in this case is the Union Government, represented by the DoT in the bidding process; then the service providers, who are the buyers of the spectrum bands, and finally the people, who are the end users.
Cellular Operators Association of India (COAI) is the apex body of telecom operators with Reliance Jio, Bharti Airtel and Vodafone Idea as its key members. Besides that, captive non-public networks (CNPN)/ private captive networks will also be set up as it has been approved by the Union Cabinet. This is to encourage innovative solutions in machine-to-machine communications, Internet of Things (IoT), Artificial Intelligence (AI) for applications in automotive, healthcare, agriculture and energy verticals. The DoT has issued fresh guidelines and stipulating conditions have been issued towards the allotment of 5G spectrum license for private captive networks.
Nokia, Ericsson and Samsung have already conducted 5G technology trials. With the 5G spectrum auction, the commercial 5G services are likely to happen in the coming months. Businesses anticipate churning huge amounts of money using 5G’s potential: it’s extremely low latency will find applications in latency-sensitive services like telemedicine, autonomous driving and online gaming.
Hopefully, we could see telecom startups grow as the government has launched the 5G test bed for them to test and develop 5G-based use cases. 5G can be a catalyst for the fourth Industrial Revolution, or Industry 4.0, which packages interconnectivity and increased automation, among others. 5G services can unlock India’s digital potential and facilitate edge computing services, Industrial Internet of Things (IIoT) applications and hybrid cloud. This can give rise to new business models as well as new payment options. Being 10 times faster than 4G, 5G services are also expected to drive greater mobile data usage.
Considering 5G smartphones, a couple of things come to mind. Being relatively cost-effective, the 3.5GHz network rollout is expected to do the rounds in the market for the next two to three years. More so, as many mid-range and premium-segment smartphones support this spectrum band. The next generation of mobile broadband will drive mobile data usage and data revenue in the next few years. As for technology, massive multiple-input multiple-output (MIMO) technology needs to be deployed for enabling 5G networks. All this calls for new learnings as well as opportunities for the domestic market.
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