India has been a laggard with respect to 5G and equally with private networks for enterprises. All of this is set to change. Having previously dragged its heels on kickstarting 5G auctions in the country, India fell off the pace relative to developed markets and several other low-and-middle income countries (LMIC) who have launched 5G commercial services or issued spectrum already.
However, India will officially hold its 5G auctions on July 27th, well over since the original set of recommendations issued by the country’s regulator, the Telecommunications Regulatory authority of India (TRAI). TRAI’s original recommendations were stalled due to controversy over the prohibitive pricing proposals, with reserve prices set at a staggering $65 million per MHz in the prime 3.5 GHz frequency band.
For context, India’s spectrum auctions have always had reserve prices set as floor prices, which would determine the minimum revenues raised and prevent collusion in a market that has seen the number of operators dwindle to three major private companies. These include the market leader Reliance Jio, Bharti Airtel and Vi (merger of Vodafone and IDEA Cellular), which has just barely survived its own financial Armageddon.
For the upcoming 5G auction, TRAI has recommended a 39% cut in the reserve price for the 3.5 GHz band, which now stands at $41.7 million per MHz. The price level is still much higher than global averages and certainly much higher than the financially strapped India operators have been publicly lobbying for. Nonetheless, this is now official policy.
The bands being put for 5G nominally include the APT 600 MHz bands from 612-703 MHz, C-band spectrum from 3300-3670 MHz and mmWave spectrum from 24.25-28.5 GHz. The APT 600 bands are not likely to see any traction in this auction given the lack of network equipment for these frequencies, high device costs, low availability of modules and other reasons. The major focus of the auction will be on the sub-6 GHz band, namely the 3300-3670 MHz bands, which correspond to the 3GPP’s n78 band, which is in line with global momentum and ensures economies of scale and device availability and affordability. The n78 band will also ensure limited disruption to and interference with the satellite broadcast providers who typically operate in the 3800-4200 MHz frequencies.
Successful bidders will have the option to make full payments upfront, or in equal installments over 20 years. They will also have the option to surrender their spectrum after 10 years and "walk away" with no further obligations for the balance of the license period.
Beyond the 39% decrease in the reserve price for sub-6 GHz spectrum, the far bigger concession made to mollify India's incumbent telcos is that there will be no spectrum usage charges (SUC) applied for the winners of this auction, for the duration of this license period. Given that SUC amounted to 3-5% of annual adjusted gross revenues (AGR), this will significantly improve cash flows for the telcos.
mmWave being made available is a positive outcome for this auction cycle, with channel sizes in the hundreds of MHz allowing for massive capacity boosts. There was heated debate and lobbying against mmWave allocations in the 28 GHz band by the satellite providers, but the compromise formula seems to be for India to auction spectrum in the 26 GHz band to minimize overlaps and interference issues. mmWave pricing is not as high as for C-band, with a typical 100 MHz channel priced at INR 700 crores or US $90 million for a license period of 20 years.
Private wireless networks
The most controversial point of this 5G auction revolved around whether the government would accept TRAI's recommendations to allow Indian enterprises to directly own and access spectrum for the deployment of 5G private networks, as opposed to going through telcos. In India, private wireless networks (PWNs) are being referred to as Captive Networks. This was a matter of much debate and in the end, the government has allowed three ways for PWNs to be deployed.
First, enterprises can approach their telco partners for a managed service that bundles spectrum, equipment and integration services. Spectrum in this scenario can be offered through a network slice or in a local breakout scenario, where the enterprise has a local network built to cover only its specific site.
Second, enterprises can approach their system integrator (SI) partners to deploy a network for them. In this case, spectrum can be offered by a SI who "owns" the spectrum or can be leased from a telco.
Third, enterprises can bid for and acquire spectrum for their specific "local" requirements and then deploy a network, using either in-house resources or presumably through SI partners. Pricing for this option is currently not defined and will be referred to TRAI for recommendations.
The Indian government’s decision to allow direct access to spectrum by enterprises is a blow for the country’s telecom operators and will likely negatively impact their Capex plans for 5G, resulting in significant coverage gaps. This is not an issue in the short term, as most enterprises looking at private networks will likely only need "local area" networks, but it will affect greater mobility use cases which require roaming onto public networks. Except for a few large enterprises that may opt to build private networks "in-house", the vast majority will opt for a managed service model.
Proponents of unlicensed spectrum as an option for private networks should note that there is currently no prospect for a CBRS-like scenario in India, given that the Indian government looks to the telecom sector for significant revenues through the auction route. As such, there is little discussion for the 6 GHz band as well, so proponents of Wi-Fi 6 and 7 will need to wait for the foreseeable future.
Ultimately, India will see 5G commercial services, even if limited in scope, by the end of 2022, with a slow ramp up to operations at scale by 2024.
Shiv Putcha is the Founder and Principal Analyst at Mandala Insights, an independent, boutique analyst firm that offers insights, opinions and research on the network and emerging technologies that will drive the next billion digital opportunities in Asia. Shiv is also keenly focused on the intersection of rising enterprise productivity, Industry 4.0 and 5G. Prior to founding Mandala, Shiv covered the telecommunications industry in Asia-Pacific for IDC and Ovum, along with stints at the Yankee Group, Qualcomm and LogicaCMG while based in the United States.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by Fierce staff. They do not necessarily represent the opinions of Fierce.