India’s 5G Spectrum Auction: A Look at the Bids and Commercial Roll-Out

The auction for India’s 5G spectrum began July 26, 2022 and closed August 1 after 40 rounds of bidding spread over seven days. Reliance Jio was the top bidder, putting up over INR 880.78 billion for 24.740GHz worth of airwaves across the 700MHz, 800MHz, 1800MHz, 3300MHz, and 26GHz bands. Bharti Airtel was the next top bidder, and put up INR 430.84 billion for 19.867GHz worth of airwaves across the 900MHz, 1800MHz, 2100MHz, 3300MHz, and 26GHz bands. Vodafone Idea bid INR 187.99 billion for the 800MHz, 2100MHz, 2500MHz, 3300MHz and 26GHz bands, totaling 6.228GHz worth of airwaves. Finally, the Adani Group bid on the 26GHz band to set up a private telecom network for their organization.

Telecom operators like Airtel and Jio had initially been concerned about private captive networks belonging to big tech firms accessing 5G spectrum during the auctions, which is why the government released fresh guidelines on the eligibility and scope of the private captive networks license. The rationalization was that it would enable enterprise 5G innovation and power Industry 4.0 applications, such as machine to machine communications (M2M), IoT, AI, etc.

On June 14, India’s Union Cabinet, chaired by Prime Minister Narendra Modi, approved the auction of airwaves capable of offering fifth-generation (5G) telecom services, including ultra-high-speed internet to both telecom operators as well as non-telecom enterprises.

The auction, which began on July 26, 2022, started at the reserve price suggested by telecom regulator, Telecom Regulatory Authority of India (TRAI). These reserve prices were 35-40 percent lower than 2018 levels. From 2022 onwards, the spectrum usage charge (SUC) on airwaves has been scrapped, further reducing the effective costs incurred by telecom operators by 40-50 percent.

Once the auctions are concluded, the 5G roll-out in India is expected to begin in August 2022. This will commence in certain Tier-1 cities initially. Full-scale roll-out across the country, including Tier-2 and Tier-3 towns and remote areas, will likely be achieved by 2023/2024. Indian telecom companies are now focusing on Sub-6GHz networks that have a longer range than mmWave 5G.

The central government also sought to enable the development and setting up of Captive Non-Public Networks (CNPN) / Private Captive Networks to spur a new wave of innovation 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. Existing telecom operators had expressed concerns over this move, asking the government to limit their scope to special premise and plant automation only, so that the private captive networks do not cause interference to public networks.

Allotment of India’s 5G spectrum: Timetable

As per the notification, a total of 72097.85 megahertz (MHz) of spectrum with a validity period of 20 years will be put to auction. The auction will be held for spectrum in nine frequency bands, including:

• Low: 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz
• Mid: 3300 MHz
• High: 26 gigahertz (GHz)

It is expected that the mid- and high-band spectrum will be utilized by telecom service providers (TSPs) for roll-out of 5G technology-based services capable of providing speed and elevated capacities.

Eligibility criteria to participate in the auction

1. Any licensee that holds a Unified Access Service License (UASL)/ Unified License (UL) with authorization for access services for that Licensed Service Area (LSA); or
2. Any licensee that fulfils the eligibility criteria for obtaining a UL with authorization for access services, and gives an undertaking to obtain a UL with authorization for access services; or
3. Any entity that gives an undertaking to obtain a UL with authorization for access services through a New Entrant Nominee as per the Department of Telecommunications (DoT) guidelines/ license conditions, can bid for the Spectrum in 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz & 26 GHz Bands subject to other provisions of the notice.

Who were the successful bidders to India’s 5G and in what bands?

The auction for India’s 5G spectrum began July 26, 2022 and closed August 1 after 40 rounds of bidding spread over seven days. This was over the three-day estimate of the government.

1. Reliance Jio was the top bidder, shelling over INR 880.78 billion for 24.740GHz worth of airwaves across the 700MHz, 800MHz, 1800MHz, 3300MHz, and 26GHz bands.
2. Bharti Airtel was the next top bidder, and put up INR 430.84 billion for 19.867GHz worth of airwaves across the 900MHz, 1800MHz, 2100MHz, 3300MHz, and 26GHz bands.
3. Vodafone Idea bid INR 187.99 billion for the 800MHz, 2100MHz, 2500MHz, 3300MHz and 26GHz bands, totaling 6.228GHz worth of airwaves.
4. Lastly, the Adani Group bid INR 2.12 billion on the 26GHz band to set up a private telecom network for their organization.

The payments by successful bidders can be done over a 20-year period, which is also the duration of their right to use these spectrums. All participants have to make their first payment, if they choose the instalment strategy, by August 17. It is reported that the Adani Group will be expected to make their payment of INR 2.12 billion upfront.

The central government accrued INR 1501.73 billion from the sale of 51,236MHz worth of airwaves; there had been 72,098MHz worth of airwaves up for auction.

Is there scope for participation by foreign players?

It must be noted that a Unified License can only be awarded to an Indian Company. Hence, any foreign applicants will need to form or acquire an Indian company, to obtain a Unified License.

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However, they are allowed to participate in the auctions directly and apply for a Unified License subsequently through an Indian company, where they hold equity stake, with a maximum foreign equity up to 100 percent under automatic route subject to restrictions on investments from land border sharing countries as per extant guidelines.

Big tech allotted spectrum for first time

While the 5G spectrum in nine frequency bands will be auctioned to telecom operators like Bharti Airtel and Reliance Jio, the notice inviting applications states that for the first time, big tech firms can be allotted 5G spectrum for their private captive networks, in the following ways:

• TSPs having access service authorization may provide private captive network as a service to an enterprise by using network resources over its Public Land Mobile Network (PLMN).
• TSPs having access service authorization may establish isolated private captive network for the enterprises using International Mobile Telecommunications (IMT) spectrum acquired by them.
• Enterprises setting up private captive networks may obtain the spectrum on lease from TSPs having access service authorization and establish their own isolated network. Required licensing terms and conditions and spectrum leasing guidelines shall be issued by DoT.
• Enterprises setting up private captive networks may obtain the spectrum directly from DoT and establish their own isolated network. In this regard, DoT will undertake demand studies and thereafter seek TRAI recommendations for direct assignment of spectrum to such enterprises.

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5G is expected to offer 10-times faster connectivity compared to 4G networks, but more importantly, 5G’s low latency network offers bigger potential for applications that work on latency-sensitive services, such as telemedicine, autonomous driving, online gaming, etc. This makes it highly attractive to big tech and private networks.

Telecom equipment makers, such as Nokia, Ericsson, and Samsung, who have already conducted 5G technology trials in the country view this announcement as a massive opportunity. Industry watchers are hopeful that enterprise 5G will be less price sensitive when compared with the mass consumer space, where Chinese players like Huawei have a dominant presence.

Why were telecom operators concerned about private captive networks accessing 5G spectrum?

The Indian Cellular Operators Association (COAI), which includes Bharti Airtel, Reliance Jio, and Vodafone Idea, as its members had expressed dissatisfaction with the government’s decision of allocating spectrum to ‘industry verticals’ for operating private captive networks and have demanded a level playing field. The COAI urged the government to ensure that these new private networks be made to conform to the same license fee and GST payment requirements as existing telecom providers.

Additionally, these CNPNs must also be subjected to necessary technical and regulatory safeguards to ensure that such networks remain truly private and isolated so as to not cause interference with public networks. These include norms like storing call/data records for two years, command logs for three years, keeping records of software updates, and ensuring data localization with remote access only from in-country and no remote access from outside of India.

The COAI had also demanded clarity in defining the scope of CNPNs, and suggested that it be restricted to machine-to-machine communication inside the CNPN’s premises only. Furthermore, citing national security concerns, the COAI said that these networks should be made to comply with the prescribed subscriber verification norms to ensure adequate verification and traceability of every user.

As a consequence of these suggestions by telecom operators, the government has issued fresh guidelines for private captive networks. 

Guidelines for private captive networks license

The Indian telecom department issued fresh guidelines on June 27, 2022 for the issue of spectrum license to private captive networks, to be issued under Section 4 of the Indian Telegraph Act, 1885. These guidelines are as follows:

Eligibility

• The applicant must an Indian company, registered under the Companies Act, 2013.
• The applicant must be the occupant of the geographical areas or properties (owned/leased) where such private captive networks are established.
• For direct assignment of spectrum from the government, the applicant must have a minimum net worth of  INR 1 billion.

Scope of license

• The guidelines stipulate that the license can not be used for providing telecommunication service. 
• The license holder may establish indoor/within premise isolated private captive network for own use within the area of operation of license. The area of operation of license refers to such area within India, where the license holder is an occupant of the geographical areas or properties (owned/leased) where such private captive networks are established.

As per official notification released on August 10, 2022, the telecom department has invited applications from enterprises willing to set up captive non-public networks to undertake demand studies for direct assignment of spectrum to entities. For the purpose, it has launched a module on Saralsanchar portal for carrying out the demand studies. 

This article was first published on June 21, 2022 and last updated on August 12, 2022.

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