5G closer to launch, Cabinet approves spectrum auction

Taking the first step towards rolling out 5G services, the government has invited bid applications for spectrum auctions starting July 26 (changed from next month) after the Union Cabinet on Wednesday cleared a proposal to auction over 72,000 megahertz (MHz), or 72 GHz, of airwaves with a validity period of 20 years.

The auction will be held for spectrum in the frequencies of 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 3,300 MHz and 26 GHz bands. At reserve price, the entirety of the spectrum is valued at over Rs 5 lakh crore. “It is expected that the Mid and High band spectrum will be utilised by telecom service providers to roll out 5G technology-based services capable of providing speed and capacities which would be about 10 times higher than what is possible through the current 4G services,” an official statement said.

The e-auction will be conducted on a “simultaneous multiple rounds” ascending model. Bidders will have to submit an earnest money deposit ahead of the auction, on the basis of which each will be allocated eligibility points. During the auction, the company will be able to place its bids using these eligibility points.

Last year, the Centre had announced a telecom sector relief package, and some facets of the scheme have been included in the terms of this auction. A mandatory requirement to make upfront payment by the successful bidders has been done away with. Payments for spectrum can be made in 20 equal annual instalments to be paid in advance at the beginning of each year. Bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance instalments.

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However, in what could be a potential blow to operators, the government has kept the reserve price of 5G airwaves unchanged, according to the Notice Inviting Application (NIA) issued by the Department of Telecommunications (DoT) on Wednesday.

Telecom operators had asked for a reduction of around 90 per cent in the reserve price of airwaves from the 2018 levels. But the Cabinet’s final approval includes a price reduction of around 35-40 per cent, in line with the Telecom Regulatory Authority of India’s (Trai) recommendations. Last month, the Digital Communications Commission (DCC) had stuck to the base pricing for spectrum suggested by Trai.

Specifically, the regulatory body had suggested that the base price for prime 5G band of 3,300-3,670 MHz be kept at Rs 317 crore per MHz — 35 per cent lower than the base price of Rs 492 crore per MHz announced in 2018.

Similarly, for the 700 MHz, the price recommended by Trai comes out to Rs 3,297 crore, which is almost 40 per cent lower than prices recommended in 2018.

The Centre has also cleared the path for tech companies to acquire spectrum directly from it to test and build industry 4.0 applications, such as machine-to-machine communications, Internet of Things, artificial intelligence, etc.

While telecom operators had previously opposed the idea of a private network, citing a potential loss in revenue, companies such as Tata Consultancy Services (TCS) have expressed interest in building these non-public 5G networks to develop such solutions. These networks will not be accessible to the general public. DoT said it will undertake demand studies and thereafter seek TRAI recommendations for direct assignment of spectrum to such enterprises.

A senior telecom official said that concerns over private networks are based on “notional loss”. “At its peak, we do not expect more than 30-40 private networks to be built and don’t foresee any tangible losses to telcos. In Germany for instance, where the 5G landscape is more established than India, only a little over 120 such licences have been issued so far,” the official said.

The Government has also finally decided to increase the number of microwave backhaul carriers in the existing frequency bands of 13, 15, 18 and 21 GHz. This has been done because high bandwidth telephony services like 5G require additional backhaul capacity for smooth functioning.

In its statement, the Government said it has decided to provisionally allot two carriers of 250 MHz each in the E-Band spectrum, and double the number of traditional microwave backhaul carriers in the existing frequency bands. Currently, across these bands, there are 2,090 microwave backhaul carriers available.

In wireless telecom networks that operate on point-to-point links, microwave frequencies are typically assigned in paired chunks of 28 MHz for use as backhaul spectrum. These frequencies are known as microwave backhaul carriers. These are generally assigned for short-haul systems to carry traffic through relatively shorter distances.



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