New Delhi : The Union Cabinet chaired by the 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.
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 utilised by Telecom Service Providers to roll-out of 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 by 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 a 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 instalment has also been done away with.
Continuing the pace of Telecom Sector reforms, the Cabinet announced various progressive options with regard to the spectrum to be acquired by bidders through the forthcoming spectrum auction for facilitating ease of doing business. 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. 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 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. 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.
Highlights of the spectrum auction:
- Spectrum being auctioned: All the available spectrum in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz, and 26 GHz bands is part of the auction.
- Technology: Spectrum allotted through this auction can be used for 5G (IMT-2020) or any other technology within the scope of Access Service License.
- Process of auction: The auction shall be a Simultaneous Multiple Round Ascending (SMRA) e-auction.
- Quantum: Total of 72097.85 MHz of spectrum has been put to auction.
- Duration of spectrum: Spectrum will be assigned for a period of twenty (20) years.
- Payment: Successful bidders will be allowed to make payment in 20 equal annual installments, duly protecting the NPV at the interest rate of 7.2%.
- Surrender of spectrum: Spectrum acquired through this auction can be surrendered after a minimum period of ten years.
- Spectrum Usage Charge: There will be no Spectrum Usage Charges (SUC) for spectrum acquired in this auction.
- Bank Guarantees: The requirement for a successful bidder to submit a Financial Bank Guarantee (FBG) and Performance Bank Guarantee (PBG) has been dispensed with.
- Captive Non-Public Network: Licensees can set up isolated captive non-public network(s) for industries using the spectrum acquired through this auction.