Three years after the launch of the first 5G network in the world, India has finally embarked on its journey towards the latest generation of telecommunication networks. As significant developments around 5G took shape, 2022 proved to be a landmark year for the country’s telecom industry. The year witnessed the much-awaited 5G spectrum auction conducted by the Department of Telecommunications (DoT), followed by a phased but speedy roll-out of the network by telcos.
A look at the key developments around 5G that took place during the past year and outlook for 2023…
Pre-auction developments
After detailed discussions and deliberations, the government began laying the groundwork for 5G spectrum auctions. While presenting the Union Budget 2022-23, Nirmala Sitharaman, Union Minister of Finance, announced the government’s plans to conduct 5G spectrum auction during the year. The government also launched the country’s first 5G test bed to facilitate the telecom industry in validating its products, prototypes and solutions in 5G as well as next-generation technologies. The test bed was developed as a multi-institute collaborative project by a total of eight institutes, led by IIT Madras, at an estimated cost of Rs 2.2 billion.
Later, in a major move, the Union cabinet approved DoT’s proposal to conduct spectrum auctions for 5G. It also gave the go-ahead for setting up captive 5G networks by big tech firms. Shortly after, DoT issued a notice inviting applications (NIA) in order to facilitate the roll-out of 5G and augment existing telecom services. According to the NIA, the available spectrum in the 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz and 26 GHz bands was to be part of the auction. A total of 72,097.85 MHz of spectrum across 10 bands would be put up for auction with a validity of 20 years. Initially, the government planned to auction airwaves worth about Rs 4.3 trillion at base price.
Subsequently, DoT approved Reliance Jio, Bharti Airtel, Vodafone Idea Limited (Vi) and Adani Data Networks as the final participants for the auction. As per government data, Jio submitted the highest earnest money deposit (EMD) of Rs 140 billion, while Airtel and Vi put in EMD of Rs 55 billion and Rs 22 billion respectively. Meanwhile, Adani Data Networks deposited Rs 1 billion, which possibly underlined its plan for picking up limited airwaves in select areas for captive networks.
5G spectrum auction – A historic milestone
The 5G spectrum auction took place in July-August 2022, with the government garnering a record over Rs 1.5 trillion. This is the highest ever spend on spectrum auctions, partly attributed to the upgradation in technology to 5G and relaxed payment terms. This amount will be in the form of a 20-year deferred spectrum debt at a 7.2 per cent interest rate, which eases the repayment burden for the players. A total of 51,236 MHz of spectrum, or around 71 per cent of the total 72,098 MHz on offer, was sold in the auction. The auction witnessed healthy bidding for the 1800 MHz spectrum band, stemming from the rising mobile broadband usage and thus the need for improving network capacity. The per unit price of 1800 MHz airwaves in the Uttar Pradesh East circle jumped to Rs 1.6 billion, almost 76.5 per cent higher than its Rs 910 million per MHz base price. All other bands were sold at their respective reserve prices except for the 600 MHz band, which saw no takers. The 700 MHz band, which went unsold in the last two auctions witnessed participation, wherein Jio bought 10 MHz across all 22 circles.
Jio emerged as the most aggressive bidder, acquiring almost half of all the airwaves sold for a consideration of over Rs 880 billion, and it was also the only bidder to acquire spectrum in the premium 700 MHz band. The 700 MHz band, which is best suited for coverage in high-density areas, is ideal for data networks and consumer services. With this, the telco’s total owned spectrum footprint increased significantly to 26,772 MHz (uplink + downlink), the highest in the country. Meanwhile, Airtel acquired 19,800 MHz spectrum by securing a pan-India footprint of 3.5 GHz and 26 GHz bands. In addition, the company was able to selectively bolster mid-band spectrum. This spectrum acquisition by Airtel was secured for a total consideration of Rs 430.84 billion. The operator has accumulated the largest pool of low- and mid-band spectrum (sub-GHz/1800/2100/ 2300 bands) which can be used to provide effective 5G coverage while massive capacities in the 3.5 GHz and 26 GHz bands will allow it to create 100x capacities at the least cost. Vi bid along expected lines for spectrum in the 3300 MHz and 26 GHz 5G bands, amounting to Rs 187.99 billion. Finally, Adani Data Networks bid only Rs 2 billion for spectrum in the 26 GHz band.
Spectrum allocation and 5G launch
A few days post the conclusion of the auction, DoT issued demand notices to all the auction participants to make payments, with an option to pay in 20 equal annual instalments. Following this, the government received over Rs 178.73 billion from the players towards 5G spectrum dues. Notably, the first payout surpassed DoT’s initial calculation of Rs 133.65 billion. DoT issued the spectrum assignment letters to telcos just 17 days after the conclusion of the 5G spectrum auction, paving a smooth path for the launch of 5G services.
On October 1, 2022, Prime Minister Narendra Modi launched 5G services in India at the inauguration of the India Mobile Congress 2022, marking an important landmark for the country’s 5G journey. Numerous 5G use cases by different telecom service providers across sectors such as education, health and agriculture were unveiled.
Phased roll-outs begin
Of the three private telecom operators in India, Airtel and Jio have started rolling out their 5G services in the country. Airtel became the first operator to launch 5G services in October with over a million subscribers. The telco initially launched the services in eight cities – Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, Siliguri and Varanasi. The company’s decision to launch its network using non-standalone (NSA) architecture allowed it to gain the first-mover advantage. Jio, meanwhile, announced the beta trial of its True 5G services for Jio users in four cities – Mumbai, Delhi, Kolkata and Varanasi – in early November. The operator has developed an indigenous 5G core and has launched its network using 5G standalone (SA) technology. The network quality, capacity and speed using SA architecture far exceed that of 5G NSA.
Both the operators are rolling out services in a phased manner. While Airtel has so far rolled out its 5G services in 23 cities, Jio has taken the lead with 75 cities. Airtel aims to roll out 5G services in most parts of the country by March
2023 and in the entire country by March 2024. Bharat Sanchar Nigam Limited (BSNL), too, expects to gradually upgrade its 4G network to 5G by August 2023, while no announcements around the roll-out have been made by Vi.
Future outlook
India’s 5G journey has just started. The 5G auctions and service roll-outs were long overdue. The strong participation in the auctions and the unexpected entry of the Adani Group has provided fresh optimism to the industry. On the financial front, a report by CRISIL Research suggests that the telecom industry would require investments of Rs 1.5 trillion-Rs 2.5 trillion in the next two to three years towards infrastructure development in order to facilitate the roll-out of 5G services. Given the sizeable investments towards spectrum acquisition and subsequent capital expenditure, telcos are expected to charge differential pricing for 5G services in the coming months. Also, the mass roll-out of 5G is expected not before fiscal year 2024, given the feeble state of fiberisation in the country. According to Ookla, in terms of speed, 5G networks in the country have reached a median download speed of 500 Mbps. Compared to the theoretical speed limit of 20 Gbps that 5G promises, there is a very long way to go. These are just some of the many roadblocks in the journey towards 5G that will need to be addressed to fully realise its potential and ensure a ubiquitous roll-out. Going forward, 5G technology will usher in an era of improved network performance and introduce new possibilities for critical sectors, giving a fillip to India’s digital economy.
Sarah Khan
