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India enters the last mile to 5G, spectrum auctions start today

Government hopes to mop up around one lakh crore

5g-device-global-reuters Representational image | Reuters

Delayed, but downloading soon. As the spectrum auctions for starting 5G services in the country kick off today, on the menu is a brave new world of faster internet, as much as ten times faster, and more importantly, connectivity that can transform the way we work and play.

The government hopes to mop up as much as one lakh crore rupees once this round of auctions are complete. 

A total of 72 gigahertz of spectrum, calculated to be worth 4.3 lakh crore rupees will be up for grabs for a period of 20 years to the three biggies who have already coughed up earnest money deposit (EMD) of nearly 22,000 crore rupees—Reliance Jio (EMD of 14,000 crore), Airtel (Rs 5,500 crore) and Vodafone (Rs 2,200 crore), the three pan-Indian telecom operators, as well as surprise entrant Adani (Rs 100 crore).

The potential worth of bids during auction will be based on the earnest money. So for example, Jio’s EMD of 14,000 crore rupees means it can bid up to 1.27 lakh crore rupees worth of spectrum—if it wants. And so on.

“As far as expectations go, it looks increasingly likely that Reliance Jio by virtue of having paid the highest EMD is likely to garner a larger chunk of the spectrum and also bid across the various spectrum bands,” said Sunil David, co-chair - Digital Communications Working Group, IET Future Tech Panel. “Bharti Airtel is likely to be next highest bidder, [while] Adani Data Networks is likely to bid for deploying private 5G networks for its own internal use.”

The move to let private companies bid for spectrum to install their own captive 5G networks is a new provision introduced by the Union cabinet for 5G last month. This was vehemently opposed by the Cellular Operators Association of India (COAI) comprising of the likes of Airtel and Vi.

There is a reason for that. With 5G expected to be expensive, at least at the starting stage, the telecom operators had been hoping to earn revenue by selling private networks to big industries, until when the costs come down enough for the general public to start adopting it. However, allowing private operators to directly bid for spectrum has poured cold water on this business plan.

While there is much excitement over the impending arrival of 5G, a mix of cost and use-cases may just prevent it from going mainstream immediately upon eventual launch of service. Beyond faster video calls and movie downloads, 5G’s USP is in real-time connectivity that can help anything from Internet-of-Things (IoT) where factory machines to delivery vans are connected for seamless logistics, to sci-fi stuff like doctors operating on patients thousands of kilometres away. That may just have to wait for the time-being, from the looks of things.

“When it comes to the adoption of 5G in the industrial domain, the small/medium manufacturers will likely not warm up to 5G very soon. Bigger industries in automotive, consumer electronics and FMCG will be the early adopters of 5G to achieve the goals of Connected Factory,” said Jegajith P.T., director of Embedded Engineering and Services, Utthunga, a Bengaluru-based engineering company.

This also raises the question of how telecom operators will make profits initially, after spending crores and crores on the auction. “Significant government investment will also be needed, otherwise we may not see the rapid capital deployment for infrastructure creation,” warned Jegajith.

However, that doesn’t stop the dreamers of ‘lightning fast’ connectivity, with the gaming industry high up on the list. “The much-awaited auction of the telecom spectrum, no doubt will be the next major step in revolutionising the mobile gaming industry,” said Mihir Sanchala, Assistant Vice President of Technology, PlayerzPot, a fantasy gaming platform. “The 5G technology is expected to bring a revolution in the gaming industry, this means super-fast downloads and uploads, live streaming, glitch-free video games sessions, and real-time gaming. It is going to enhance the quality to offer an unmatched high quality end-user virtual experience to the gamers.”

“There will also be enough spectrum for all and I do not think there will be a bidding war, given the current financial health of the Indian telecom providers, barring Reliance Jio, who are financially much better off compared to the others,” added David of IET.


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