The Department of Telecommunications (Dot) is soliciting the Regulators to lower the floor price for the auction of 5G Airwaves as 63% of the spectrum was left unsold in the March auction. Here’s why!
5G in India
Pricing a spectrum is a juggling act, especially in a country like India where millions of consumers await the next generation. Setting the prices high threatens to impact the development of the digital economy of a country whereas the state stands to lose money if the spectrum is under-priced. Unlike earlier cellular wireless generations, 5G needs a mix of spectrum across low to high bands. This is mainly because next-generation technology promises to offer ultra-fast connectivity with no latency, better availability and reliability and multiple-use cases for large enterprises across industries.
What Happened?
A telecom spectrum auction was held in March this year. A total of 2310MHz spectrum was on sale with the top three telcos, Reliance Jio, Bharti Airtel and Vodafone Idea, being the active bidders. The premium 700 MHz band, one of the premium bands to establish the 5G network, did not have any bidders for the second time. Earlier in the 2016 auctions also, it was not touched by the industry because the operators believed that the base price was too high.
TRAI- Telecom Regulatory Authority of India reserved the price of the 5G spectrum at INR 4.92 billion ($66.2 million) per unit for airwaves between 3.3-3.6 GHz – one of the highest rates in the world. TRAI was previously warned by the Cellular Operators Association of India about the high reserve price of the 5G network as it would create difficulties for local carriers to participate in the auction.
Fearing no takers of the network, the government decided to seek fresh prices from TRAI. Earlier, only 175 MHz was being made available for the auction to the telcos which is considered to be insufficient if India is to establish next-generation services and technologies. At present, the number stands at 275 MHz in the 3.3-3.6 GHz band for 5G in India. A report on the status of fifth-generation technology in India published by the parliamentary panel in 2021 deduced that ‘sufficient preparatory work has not been undertaken for launching 5G services in India.’ The major barriers apart from high auction prices are lack of infrastructure, consumer constraints and telco issues.
What’s Next?
It is likely the 5G spectrum auction with revised prices is to be postponed from this year to early 2022 which will further push the launch of 5G services no less than the second half of 2022 or early 2023.
DoT authorised a six-month trial to telcos- Bharti Airtel, Reliance Jio Infocomm, Vodafone Idea and MTNL, with preference given to homegrown OEMs, across multiple locations including Delhi, Mumbai, Kolkata, Bengaluru, and Hyderabad. The allotment includes 100 units in the 3.5 GHz band, 800 units in the 26 GHz mm-wave, and 10 units in the premium 700 MHz band. Chinese vendors like Huawei and ZTE were not incorporated in this stage of the 5G trials.
The prospective of fifth-generation is groundbreaking. With such unapparelled levels of connectivity, 5G internet will allow the transformation of education, healthcare, agriculture, etc. in rural areas, while taking the smart cities steps ahead towards a more superior digital India. Hence, it’s time for the regulators to analyse the pricing and allocation strategies to work out a win-win solution which guarantees optimal utilization of the spectrum and furthermore maximize the returns from this national resource.
By- Tanya Wadhwani & Nehal Chawla
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