Spectrum auctions in India are rarely devoid of controversy and a planned sale of 5G airwaves later this year is unlikely to be any different.

According to media reports, the government plans to sell spectrum in the 3GHz band along with 700MHz airwaves that it failed to sell during the country's last auction. Remaining spectrum in the 800MHz, 900MHz, 1800MHz, 2.1GHz, 2.3GHz and 2.5GHz bands will also go up for sale.

But the telecom industry is going through tough times. The recent arrival in the market of disruptive new entrant Reliance Jio , which has signed up 100 million customers in just 170 days by offering free voice and data services, has put huge pressure on older players, triggering falls in sales and profits.

Unsurprisingly, all of India's service providers have suffered financially. Bharti Airtel Ltd. (Mumbai: BHARTIARTL), India's largest operator, recorded a profit drop of 55% in the third quarter of the current financial year, while Idea Cellular Ltd. , the third-biggest operator, recorded a loss of 4.79 billion Indian rupees ($72.3 million) in the same period.

The industry is also in the midst of consolidation. Airtel has recently acquired Telenor, Videocon Telecommunications Ltd. and Augere, while Reliance Communications Ltd. , the country's fifth-biggest operator, has taken over MTS and Aircel Ltd. Vodafone India , the number two player, is in talks with Idea Cellular about a merger. (See Vodafone, Idea Could Merge This Week – Reports and What Does Vodafone-Idea Merger Mean for India's Telecom Industry? )

That means telcos often face a difficult choice between channeling resources into fighting competition and defending their position in the market. In the current circumstances, they are also shying away from exploring or investing in new technologies.

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On top of all that, the Indian market is no longer starved of spectrum, as was the case a few years ago. Thanks to government auctions over the last couple of years, most operators have sufficient spectrum to support the launch of new services.

Given levels of competition and industry debt, telcos are unlikely to be enthusiastic about the latest auction plans. Authorities bagged INR657.8 billion ($9.8 billion) in the last auction in October 2016, much less than the INR5.6 trillion ($83.9 billion) they had been targeting. Moreover, only 40% of the available spectrum was sold, with telcos totally ignoring 700MHz and 900MHz frequency bands because of the high reserve prices attached to them. (See India's Auction Raises $9.8B, 700MHz Remains Unsold.)

Bharti Airtel and BSNL, a government-backed telco, have recently signed an agreement with Nokia on 5G collaboration, hoping to spur research and adoption in India. But it is still debatable whether the Indian market is even ready to begin exploring 5G technology. Broadband wireless access (BWA) spectrum was auctioned way back in 2010, and yet it has only started to have some kind of impact in the last couple of years, largely because of the lack of a mass-market device ecosystem. Data consumption, meanwhile, picked up only following the launch of services by Reliance Jio. In planning a 5G auction this year, India's government seems to be ignoring the realities of the Indian market.

— Gagandeep Kaur, contributing editor, special to Light Reading