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5G spectrum auction will take place in July. Here’s what you need to know.

The Union cabinet has approved DoT’s proposal for 5G spectrum auction as they are set to take place in July this year.

The Union cabinet led by Indian Prime Minister Narendra Modi has approved the proposal submitted by the Department of Telecommunications (DoT) to conduct an auction of spectrum for 5G airwaves, according to a press release by the government. The auction will commence on July 26, 2022, the government revealed in another release.

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Why it matters: The cabinet approval was critical because it was the last step in order for the auction to take place. The auction will decide how much spectrum will be assigned to successful bidders who will be responsible for providing 5G services across the country.

Why is the auction important: It is important as it will decide which telco picks up spectrum that is an integral part of the entire 5G ecosystem. It is only after the auction that telcos can begin to roll out 5G services in the country. The 5G technology stands to impact businesses and citizens significantly.

How much spectrum will be auctioned: A total of 72097.85 MHz of spectrum with a validity period of 20 years will be put to auction, the release stated.

  • The auction will be held for spectrum in the following frequency bands-
    • Low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz),
    • Mid (3300 MHz),
    • High (26 GHz).
  • The bands in the mid and high frequencies will be reserved for 5G which is set to be at least 10 times faster than 4G, the release added.

What do we know about the auction: The DoT has initiated the auction and Notice Inviting Applications (NIA) were issued on June 15, 2022.

  • Auction process: The auction shall be a Simultaneous Multiple Round Ascending (SMRA) e-auction, as informed by the government.
  • Additional information: The DoT has uploaded details of the spectrum auction, which includes the reserve price, pre-qualification conditions, Earnest Money Deposit (EMD), Auction Rules, etc. on its website which can be accessed here.

Did the government approve private captive networks: The Union cabinet has decided to ignore the concerns of the telecom industry over private captive networks.

  • It claims to have enabled the development and setting up of such networks to be used for Industry 4.0 applications such as machine-to-machine (M2M) communications, Internet of Things (IoT), and Artificial Intelligence (AI).
  • It will be interesting to see how the telecom industry reacts to this development as it had only recently asked the government to intervene and not allocate spectrum to enterprises looking to build these networks for themselves.

What are the measures to ease terms for telcos: The cabinet announced the following measures to make it easy for successful bidders to service their payments-

  • There is no mandatory requirement to make upfront payment by the successful bidders. The release said that the bidders can make payments for spectrum in 20 equal annual instalments to be paid in advance at the beginning of each year.
  • The bidders have an option to surrender the spectrum after 10 years with no future liabilities with respect to balance instalments.
  • The cabinet has allotted two carriers of 250 MHz each in E-band provisionally to the Telecom Service Providers (TSP) to meet the backhaul demand.
  • The number of traditional microwave backhaul carriers in the existing frequency bands of 13, 15, 18 and 21 GHz bands have been doubled.
  • The government seems to have ignored calls by COAI to reduce the reserve price and have left it unchanged. The COAI had called for 80-90 per cent reduction earlier.

What were the measures announced in 2021: The telecom industry had been clamouring for relief for many months as it had been under financial distress. Here are some of the measures announced in September-

  • The definition of the Adjusted Gross Revenue will exclude non-telecom revenue on a prospective basis.
  • There was a reduction (80 per cent) in Bank Guarantee requirements against License Fee (LF) and other similar levies.
  • The government has removed the clause for Spectrum Usage Charge (SUC) for spectrum acquired in future spectrum auctions.
  • The government also permitted a 100% Foreign Direct Investment (FDI) under automatic route in the sector.

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I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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