Esc 4G, Ent 5G: Union Cabinet approves proposal for spectrum auction

New Delhi: Union Cabinet has approved a proposal of the Department of Telecommunications to conduct a spectrum auction through which spectrum will be assigned to the successful bidders for providing 5G services to the public and the enterprises. A total of 72097.85 MHz of spectrum with a validity period of 20 years will be put to auction to be held by the end of July 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.

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.

The spectrum auction will be benefitted from the Telecom Sector Reforms announced in September 2021. The reforms include zero Spectrum Usage Charges (SUC) on the spectrum acquired in the upcoming auction, providing 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 installment has also been done away with.

For the first time, there is no mandatory requirement to make upfront payment by the successful bidders. Payments for spectrum can be made in 20 equal annual installments to be paid in advance at the beginning of each year. This 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 concerning balance installments. The availability of a 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. The Cabinet also decided to double the number of traditional Microwave backhaul carriers in the existing frequency bands of 13, 15, 18, and 21 GHz bands.

The Cabinet also decided to enable the development and setting up of Private Captive Networks to 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 other sectors. Spectrum is an integral and necessary part of the entire 5G eco-system. The upcoming 5G services have the potential to create new-age businesses, generate additional revenue for enterprises, and provide employment arising from the deployment of innovative use-cases and technologies.