Cabinet nod to Rs 4.3 lakh cr 5G spectrum auction; to start on July 26

The government will next month auction about Rs 4.3 lakh crore worth of airwaves capable of offering fifth-generation or 5G telecom services including ultra-high-speed internet, and gave its nod for setting up of captive 5G networks by big tech firms.

As much as 72 GHz of spectrum will be put on the block during the auction, set to commence on July 26, 2022.

The auction will be held for spectrum in various low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), mid (3300 MHz) and high (26 GHz) frequency bands.

''The beginning of a new era for Indian Telecom. 5G spectrum auction announced,'' Communications Minister Ashwini Vaishnaw tweeted.

Sources said post the auction, the initial rollout of 5G service (about 10 times faster than 4G) could begin from August in a phased manner in the country.

Going by the stipulated base price, the entire spectrum put on the block is worth at least Rs 4.31 lakh crore, the sources told PTI.

Cabinet has approved 5G auctions at reserve prices recommended by the sector regulator Telecom Regulatory Authority of India (TRAI). TRAI had recommended an about 39 per cent cut in floor price for the sale of 5G spectrum for mobile services, a rate that was earlier labelled 'deeply disappointing' by COAI as telcos were keen on 90 per cent lower prices.

While the 5G spectrum in nine frequency bands will be auctioned to telecom operators like Bharti Airtel and Reliance Jio, the Notice Inviting Applications -- the bid-related document issued by the Telecom Department -- said big tech firms for the time being will be allowed to take the 5G spectrum for their captive non-public network on lease from the telecom companies.

The decision on private networks is expected to deal a blow to telcos, which had been arguing that if independent entities are allowed to set up private captive networks with direct 5G spectrum allotment by the telecom department, the business case of TSPs (Telecom Service Providers) will get severely degraded.

Notably, Cellular Operators' Association of India (COAI) -- which counts Reliance Jio, Bharti Airtel and Vodafone Idea as its members -- did not issue a statement on Wednesday on the spectrum auction.

The bid document said direct allocation to the big tech companies will follow a demand study and sector regulator TRAI's recommendation on aspects such as pricing and modalities of such allocation.

Big tech companies like Google and Tata Consultancy Services (TCS) have been seeking direct allocation of spectrum for applications such as machine-to-machine communications, IoT and Artificial Intelligence, while telecom companies have been opposing direct allocation of 5G spectrum to them saying it will distort the level playing field and rob the government of revenues.

''Enterprises setting up Captive Non-Public Network may obtain the spectrum on lease from TSPs (telecom service providers) having Access Service Authorization and establish their own isolated network. Required Licensing terms and conditions and Spectrum Leasing guidelines shall be issued by DoT,'' the Notice Inviting Applications said.

As per the document, the government from time to time will publish required provisions and guidelines and licensing terms and conditions for enabling the setting up of Captive Non-Public Networks (CNPNs).

According to the bid document, the auction is slated to start on July 26, 2022. Among other key dates to watch-out for is the pre-bid conference scheduled for June 20, 2022, submission of applications with a deadline of July 8, and pre-qualification of bidders on July 18.

Mock auctions will be held on July 22 and 23, 2022.

A total of 72,097.85 MHz of spectrum with a validity period of 20 years will be put to auction as India market gears up 5G services that will usher in ultra high speeds and spawn new-age services and business models.

Overall, the payment terms have been eased for bidders in the upcoming auction.

For the first time ever, there is no mandatory requirement to make upfront payment by the successful bidders. Payments for spectrum can be made in 20 equal annual instalments to be paid in advance at the beginning of each year, a relaxation that is expected to significantly ease cash flow requirements and lower the cost of doing business in this sector.

The bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance instalments. No SUC (spectrum usage charges) will be charged for spectrum acquired in this auction.

''The availability of sufficient backhaul spectrum is also necessary to enable the roll-out of 5G services. To meet the backhaul demand, the Cabinet has decided to provisionally allot 2 carriers of 250 MHz each in E-band to the Telecom Service Providers,'' an official statement said.

The requirement for a successful bidder to submit a Financial Bank Guarantee (FBG) and Performance Bank Guarantee (PBG) has also been done away with.

ICRA estimates that the telecom industry will shell out around Rs 1 - 1.1 lakh crore on the 5G auction, despite telcos' reservations over high spectrum prices, but cautioned that sector debt level is likely to rise with the upcoming auctions.

The Broadband India Forum (BIF), which had batted for private 5G networks by enterprises, said the Cabinet's decision to enable captive networks is a forward-looking step that will drive digital transformation, augment industry efficiencies and lead to greater economic benefits.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)