Recent developments in India indicate that the 5G spectrum auction is likely to be held only in the second half of 2022.
Recently, the Department of Telecommunications (DoT) has approved the telcos’ request for extension of 5G trials. Effectively, this has pushed the 5G spectrum auction to the second half of 2022 and, consequently, the launch to late 2022 or early 2023.
Earlier this year, the DoT had given 5G spectrum in 700 Mhz, 3.5 Ghz and 26 Ghz frequency bands to the service providers for six months to conduct tests and trials. This period is coming to an end on November 26.
“Nobody is really complaining about the delay in 5G spectrum auction," said Mahesh Uppal, a telecom expert and director of Comfirst, a telecom consultancy firm. "There are several reasons for this. To begin with, the telcos see 5G as an opportunity area, but they are not in a position to exploit it because of the lack of a clear use case. There is some evidence of 5G’s relevance in niche industries, but this is not a network that they can scale. Then there is the question of the high price of the 5G spectrum. It is quite unrealistic right now.”
As per the price recommended by the Telecom Regulatory Authority of India (TRAI), the auction includes 8,644 MHz of spectrum for a reserved price of INR 4900 billion ($65.78 billion). However, all the Indian service providers have voiced concerns regarding the high base price of the spectrum.
Considering the lack of demand coupled with high reserve price means that the auction is also unlikely to drive the prices up, which is also one of the reasons why the government is reluctant to conduct a 5G auction right now. Logically, the extension of 5G trials should not prevent the government from going ahead with the spectrum auction. However, the lack of readiness on the part of the telcos and 5G ecosystem is leading to the delay of the 5G spectrum auction in India.
The 5G trials story
The three private telcos, Reliance Jio, Bharti Airtel and Vodafone Idea, are in the process of conducting trials. Jio is testing its indigenously developed 5G RAN and Core, while Airtel and Vodafone Idea have collaborated with Ericsson and Nokia to test 5G technology and use cases.
The delay will give more time to the telcos to develop 5G use cases. For instance, Bharti Airtel, India’s second-largest service provider, recently launched the #5GforBusiness initiative to test enterprise use cases. It has collaborated with several technology vendors, including Amazon Web Services, Cisco, Google Cloud, Nokia, Ericsson and Tata Consultancy Services (TCS), among others, to conduct trials of 5G-based solutions. Airtel has also partnered with Mavenir for open RAN trials, as per media reports.
Further, another way the delay helps the service providers is that it brings down the equipment cost. 5G is already deployed in more than 150 countries, and as the vendors gain economies of scale, the gear cost is likely to come down. Since India has one of the lowest tariffs and high spectrum costs, this is a crucial advantage for the telcos.
Considering all these factors, it is clear why none of the stakeholders are keen on holding 5G spectrum auctions at this point in time.