Indian Telcos Want 5G Auction Postponed

India's top three service providers -- Bharti Airtel, Reliance Jio and Vodafone Idea -- are demanding that an auction of 5G spectrum be delayed.

Authorities plan to sell licenses at the end of this year, but the operators have complained about high reserve prices and pointed to the current lack of 5G opportunities. Previously, the Telecom Regulatory Authority of India (TRAI) recommended a base price of 4.92 billion Indian rupees ($71 million) per unit for spectrum in the 3300GHz to 3600GHz frequency band. Including other bands, 8,294MHz would be up for sale in one of the biggest spectrum auctions in the world.

The high reserve prices have prompted criticism from all the service providers. "Current reserve price of 5G spectrum is too high -- approximately five-to-six times higher than other countries and needs urgent revision. The unsold mobile spectrum has cost India INR5400 billion ($75.9 billion) in economic loss since 2010. Forty percent of spectrum since the 2010 auctions has remained unsold," said TV Ramachandran, the president of Broadband India Forum, an industry association, in a recent statement.

Mounting debts explain why India's service providers are so resistant to a costly auction. Bharti Airtel had debts of $15.65 billion at the end of March. RJio's are at the same level, although unlike rivals it is at least profitable. As for Vodafone Idea, it is still wrestling with the integration of two networks following the merger last year that created it. Investing heavily in new 5G spectrum is clearly unviable.

Moreover, operators still see little use for the 5G standard in India, according to media reports. Even outside India, where services have been launched, operators are struggling to come up with lucrative "use cases" for the technology. Judging by previous experience, offering higher-speed connectivity alone is unlikely to pay off.

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India's government is trying to address this problem. Authorities are currently working with institutes such as the Indian Institute of Technology (IIT) and the Indian Institute of Science (IISc) to develop 5G services that are unique to India. They have also set up a testbed in collaboration with various institutes for research-and-development purposes. But the government has still not allocated spectrum needed for trials. (See India Plans 5G Spectrum Auction, Trials by Year End.)

A delay to the spectrum auction will inevitably hold up the rollout of 5G in India. That delay would follow a boom that has taken place in the mobile market, with India's operators witnessing dramatic growth in the consumption of mobile data services. With 4G becoming the de facto standard for mobile broadband, the timely introduction of 5G might spur the development of new services and generate additional revenue streams for the operators, say critics.

India's government has always hoped that 5G would be rolled out in line with service launches in other parts of the world, ensuring India did not fall behind. Unless authorities cut reserve prices, or find other ways of encouraging India's operators, that now seems unlikely to happen.

— Gagandeep Kaur, contributing editor, special to Light Reading

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