Ravi Shankar Prasad has announced that the spectrum sale is likely to take place towards the end of 2019 or early 2020. The government hopes and expects telecom operators to pick up 5G spectrum during this auction in order to get onto the 5G bus at the earliest. It has been pushing for service roll-out in tandem with global markets by 2020.
This enthusiasm is, however, not echoed by the industry and telcos have expressed reluctance to acquire 5G spectrum on account of the high reserve price suggested by TRAI. Moreover, the quantum of 5G spectrum that has been allocated for the upcoming auction is not enough for a country the size and density of India.
As the BIF recently highlighted, unsold spectrum has serious implications in terms of not only a major loss to the exchequer but also of spectrum remaining idle and thereby impacting telco operations. It noted that unreasonably high reserve prices in the previous auctions resulted in an economic loss of approximately Rs 5.4 trillion to the country.
An unfavourable spectrum environment is not the only impediment to fulfilling India’s 5G dream. The industry’s poor financial health and infrastructural bottlenecks are other major concerns.
Non-spectrum investments of $60 billion-$70 billion would be required for 5G service roll-out. Interestingly, Indian telcos’ annual spend at present is around $2 billion. The three private telcos together carry an estimated net debt of nearly Rs 8 trillion on their books.
Much work is also required to be done at the ground level, in terms of rolling out small cells, enhancing fibre reach and increasing tower fiberisation. Telcos need to build capability in the form of skills, competence and new operating models – almost an entirely new ecosystem.
5G’s power to digitally transform the country cannot be emphasised enough. It will give a boost to the government’s Digital India vision. Its use cases in remote healthcare and agriculture can have far-reaching implications for society than any of the previous wireless generations.
With the government’s seemingly unwavering stance on the reserve price and telcos’ insistence on a reduction, it will be interesting to see how the 5G scenario unfolds.