Taking the first step towards rolling out 5G services, the government has invited bid applications for spectrum auctions starting July 26 (changed from next month) after the Union Cabinet on Wednesday cleared a proposal to auction over 72,000 megahertz (MHz), or 72 GHz, of airwaves with a validity period of 20 years.
The auction will be held for spectrum in the frequencies of 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 3,300 MHz and 26 GHz bands. At reserve price, the entirety of the spectrum is valued at over Rs 5 lakh crore. “It is expected that the Mid and High band spectrum will be utilized by telecom service providers to roll out 5G technology-based services capable of providing speed and capacities which would be about 10 times higher than what is possible through the current 4G services,” an official statement said. A senior telecom official said that concerns over private networks are based on “notional loss”. “At its peak, we do not expect more than 30-40 private networks to be built and don’t foresee any tangible losses to telcos. In Germany for instance, where the 5G landscape is more established than India, only a little over 120 such licenses have been issued so far,” the official said.
The Government has also finally decided to increase the number of microwave backhaul carriers in the existing frequency bands of 13, 15, 18 and 21 GHz. This has been done because high bandwidth telephony services like 5G require additional backhaul capacity for smooth functioning.
In its statement, the Government said it has decided to provisionally allot two carriers of 250 MHz each in the E-Band spectrum, and double the number of traditional microwave backhaul carriers in the existing frequency bands. Currently, across these bands, there are 2,090 microwave backhaul carriers available.
In wireless telecom networks that operate on point-to-point links, microwave frequencies are typically assigned in paired chunks of 28 MHz for use as backhaul spectrum. These frequencies are known as microwave backhaul carriers. These are generally assigned for short-haul systems to carry traffic through relatively shorter distances. The e-auction will be conducted on a “simultaneous multiple rounds” ascending model. Bidders will have to submit an earnest money deposit ahead of the auction, on the basis of which each will be allocated eligibility points. During the auction, the company will be able to place its bids using these eligibility points.
Last year, the Center had announced a telecom sector relief package, and some facets of the scheme have been included in the terms of this auction. A mandatory requirement to make upfront payment by the successful bidders has been done away with. Payments for spectrum can be made in 20 equal annual installments to be paid in advance at the beginning of each year. Bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance installments. Telecom operators had asked for a reduction of around 90 per cent in the reserve price of airwaves from the 2018 levels. But the Cabinet’s final approval includes a price reduction of around 35-40 per cent, in line with the Telecom Regulatory Authority of India’s (Train) recommendations. Last month, the Digital Communications Commission (DCC) had stuck to the base pricing for spectrum suggested by Train.
Specifically, the regulatory body had suggested that the base price for prime 5G band of 3,300-3,670 MHz be kept at Rs 317 crore per MHz — 35 per cent lower than the base price of Rs 492 crore per MHz announced in 2018.
Similarly, for the 700 MHz, the price recommended by Train comes out to Rs 3,297 crore, which is almost 40 per cent lower than prices recommended in 2018.
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