Union Cabinet Approves 5G Spectrum Auction; No Upfront Payment for Successful Bidders
Moneylife Digital Team 15 June 2022
The Union Cabinet, on Wednesday, approved a proposal from the department of telecommunications (DoT) to conduct a spectrum auction by July end for providing fifth-generation (5G) services in India. A total of 72097.85MHz (megahertz) spectrum with a validity period of 20 years will be put to auction by the end of July. 
In a release, the ministry of communications says, "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 ten years with no future liabilities with respect to balance instalments."
According to the ministry, the spectrum auction will benefit 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 instalment has also been done away with," it added.
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 two carriers of 250MHz each in E-band to the telecom service providers (TSPs). The Cabinet also decided to double the number of traditional microwave backhaul carriers in the existing frequency bands of 13GHz (gigahertz), 15GHz, 18GHz and 21GHz 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), and artificial intelligence (AI) across automotive, healthcare, agriculture, energy and other sectors.
The auction will be held for spectrum in various low (600MHz, 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz), mid (3300MHz) and high (26GHz) frequency bands.
It is expected that TSPs will utilise the mid and high-band spectrum to the 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.
Broadband, especially the mobile broadband, has become an integral part of the daily lives of citizens. This received a big boost through the rapid expansion of 4G services across the country since 2015. Eight hundred million subscribers have access to broadband today compared to 100mn (million) subscribers in 2014.
"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," the ministry says.
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