The Union Cabinet has approved the Department of Telecom's proposal to conduct a spectrum auction for providing 5G services which will pave the way for ultra-high-speed internet and gave its nod for setting up captive 5G networks by the big tech firms.
"The Union Cabinet chaired by Prime Minister Narendra Modi has approved a proposal of the Department of Telecommunications to conduct a spectrum auction through which spectrum will be assigned to the successful bidders for providing 5G services to public and enterprises," the official release said.
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, the release said.
“Once the auction is completed, the 5G services, which will be about 10 times faster than 4G, will be rolled out in 2022-23. This will usher in ultra-high-speed internet and spawn new-age services and business models,” said an official from the Department of Telecom.
The cabinet approved 5G auctions at reserve prices recommended by the sector regulator Telecom Regulatory Authority of India (TRAI) despite the telecom firms demanding its reduction.
The telecom industry is expected to shell out around Rs 1-1.1 lakh crore on the 5G auction, despite telcos' reservations over high spectrum prices, ICRA said but cautioned that sector debt level is likely to rise with upcoming auctions.
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, it added.
The telecom operators -Reliance Jio, Airtel and Vodafone-Idea-are expected to participate in the 5G spectrum auction, which will commence on July 26, 2022.
The government has also cleared the path for tech companies to acquire spectrum directly from it to test and build industry 4.0 applications such as machine-to-machine communications, Internet of Things, artificial intelligence, etc. Earlier big tech firms like Google, and TCS have expressed interest to take the 5G spectrum for their captive non-public network.
The Notice Inviting Offer said direct allocation to the big tech companies will follow a demand study and sector regulator TRAI's recommendation on aspects such as pricing and modalities of such allocation.
The government introduced reforms which include no mandatory requirement to make upfront payments 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.
The bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance instalments. No SUC (spectrum usage charges) will be charged for the spectrum acquired in this auction.