Cabinet nod to 5G auctions; 72097.8 MHz spectrum to be put on block by July-end

The bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance instalments

The Union cabinet has approved the modalities for holding 5G spectrum auctions, and 72097.85 MHz of radio waves will be put on the block by July-end, an official release said on Wednesday.

The cabinet also decided to enable the development and setting up of private captive networks to spur a wave of innovation in new-age industry applications such as machine-to-machine communications, Internet of Things (IoT), Artificial Intelligence (AI) across automotive, healthcare, agriculture, energy, and other sectors.

“The Union cabinet chaired by Prime Minister Narendra Modi has approved a proposal of the Department of Telecommunications to conduct spectrum auction through which spectrum will be assigned to the successful bidders for providing 5G services to public and enterprises,” the release said.

Auction by July end

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.

Also read: 5G allocation to bulk users would be coal scam redux

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.

Continuing the pace of telecom sector reforms, the cabinet announced various progressive options with regard to the spectrum auction for facilitating ease of doing business.

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

The reforms also 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.

Options for bidders

The bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance instalments.

“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,” it said.

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 release said.

The market is gearing up for the rollout of 5G services that will usher in ultra-high speeds and spawn new-age services and business models.

Telcos had asked for a 90 per cent cut in the reserve price of airwaves from the 2018 levels. But, in a blow to the telcos, the cabinet has left the reserve price of 5G airwaves unchanged, according to the Notice Inviting Application (NIA) issued on Wednesday.

Also read: No biz case for 5G roll-out if concerns on private captive networks not addressed: Telcos body

Telecom regulator, the Telecom Regulatory Authority of India (Trai), in its recommendations in April, had cut the prices on an overall basis by 39 per cent than August 2018 suggested prices.

(With agency inputs)