India’s 5G spectrum auction finally has a date and the union government has announced that it is announcing auction of 5G spectrum for telecom operators. The move comes after a recent report claimed that the auction of 5G spectrum could be delayed with the involvement of private enterprises also in the fray. Now, an official announcement has confirmed that 5G spectrum auction will be held in India with immediate effect, and will be completed by the end of July 2022. The expedited auction process is being done in order to help companies and telecom operators roll out services based on 5G network, soon.
5G Spectrum Auction: How it Would Work
In an official statement, the union government has said that the rollout of 5G broadband and mobile internet services would be done at a faster pace than the 4G rollout in India in 2015 – seven years ago. The release on the upcoming 5G spectrum auction further said that while India had only 100 million broadband users in 2014, the rollout of 4G has helped grow this number by 8x over the past eight years – up to around 800 million by 2022.
“The 5G test bed setup in eight top technology institutes of India is speeding up the launch of domestic 5G technology in India. The PLI (Production-Linked Incentives) schemes for mobile handsets, telecom equipments and the launch of the India Semiconductor Mission is expected to help build a strong ecosystem for the launch of 5G services in India,” the government’s official statement said.
A total of 72097.85 MHz of spectrum will be auctioned in the process, with Reliance Jio, Bharti Airtel and Vodafone Idea all expected to take part. The spectrum will be leased to telcos for a period of 20 years, and will offer low, mid and high frequency bands to the telcos. Of this, the mid and high bands would be used by telcos to offer commercial and enterprise services.
The government has further claimed that the 5G network and services based on it, once rolled out, would be almost 10x faster than the present generation 4G network services in India.
New Policies to Aid Telcos?
The government’s statement also claimed that the upcoming 5G services would be more viable for telcos to run their businesses profitably – thanks to the reforms made to the telecom sector by the union government in September last year.
In its statement, the government said, “The reforms include zero Spectrum Usage Charges (SUC) on the spectrum acquired in the upcoming auction, providing a significant relief to the service providers in terms of the operating cost of telecom networks. Further, the requirement of submitting a financial bank guarantee equivalent to one annual instalment has also been done away with.”
SUC is part of a telco’s adjusted gross revenues (AGR), which is combined with a yearly licensing fee to become a percentage of a telco’s overall revenue – which it then has to pay the Indian government’s department of telecommunications (DoT) for operating telecom services in the country.
The government also said that telecom will no longer be needed to pay their entire spectrum bid amount as upfront payment at the time of the auction. Instead, telcos can pay for their 5G spectrum in 20 equal instalments at the start of every year of operating 5G services in India. The telcos will also be allowed to surrender their spectrum after 10 years – without accruing any future payment liability for the same.
Telcos in India will also be allocated additional spectrum for 5G backhaul, which is crucial to connect the core 5G network to remote network sites for extensive network coverage. Finally, the government has also decided to allow private captive 5G networks owned and operated by non-telco companies in India as well – something that telcos had protested against.
The government, explaining its rationale, said that allowing these captive networks will “spur a new wave of innovations in Industry 4.0 applications such as machine to machine communications, Internet of Things (IoT), Artificial Intelligence (AI) across automotive, healthcare, agriculture, energy and others.”
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