The government has finally set the ball rolling for the much-awaited 5G spectrum auctions. The move comes after the Union Cabinet gave the go-ahead for auctioning 72,097.85 MHz of spectrum by the end of July 2022. The auction will include spectrum in various low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), mid (3300 MHz) and high (26 GHz) frequency bands that will be offered for a validity period of 20 years.
In terms of finances, the government will auction about Rs 4.3 trillion worth of airwaves. The cabinet has stated that payment for the spectrum can be made in 20 equal annual instalments to be paid in advance at the beginning of each year. Also, the bidders will be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance instalments.
Further, the cabinet has decided to enable the development and setting up of private captive networks to spur innovations in Industry 4.0 applications such as M2M communications, IoT and artificial intelligence across automotive, healthcare, agriculture, energy and other sectors.
Soon after the cabinet’s go-ahead, DoT issued a notice inviting applications (NIA) to facilitate the roll-out of 5G. The NIA has set a net worth eligibility for bidders at Rs 1 billion per licence service area, with the exceptions being Jammu & Kashmir and Northeast service areas where the net worth criteria is Rs 500 million. Further, the spectrum acquired through this auction can be surrendered after a minimum period of 10 years. The spectrum usage charges have been done away with in this auction.
While the process of spectrum auctions has begun, a few key issues still remain. For one, telecom operators seem dissatisfied with the government’s decision to allow captive private networks to participate in the 5G spectrum allocation. Two, industry analysts are concerned that the telcos will have to shell out Rs 1 trillion-Rs 1.1 trillion on the 5G auction, despite their reservations over high spectrum prices. DoT has scheduled a pre-bid conference on the NIA to address these issues.
Going forward, it remains to be seen whether telcos bid aggressively to grab a share of 5G airwaves or the auction witnesses a muted response owing to their financial constraints.
