India to Hold 5G Auction in June 2019

India's government plans to conduct an auction of 5G airwaves in June this year in line with its goal of launching 5G commercial services in 2020.

The Telecom Regulatory Authority of India (TRAI) has recommended auctioning 20MHz blocks in the 3.3-3.6GHz band for 5G at a price of 4,920 million Indian rupees ($69.1 million) per MHz. But Indian telcos have been grumbling about the high price of spectrum, and their active and enthusiastic participation in the auction now looks in doubt.

Indeed, many observers foresee the risk of a muted response to the auction later this year, with Reliance Jio and Bharti Airtel Ltd. (Mumbai: BHARTIARTL) emerging as the only participants.

Media reports suggest the recently merged Vodafone-Idea may stay away while it focuses on integrating the Vodafone India and Idea Cellular Ltd. networks and on cutting operating costs and capital expenditure. It continues to record drops in customer numbers, sales and profit and could be overtaken by RJio and Airtel, in terms of revenue market share, by the end of the year, according to some analysts.

Meanwhile, other Indian operators have already spent huge amounts on 4G spectrum and investment in 4G networks. They are still in the expansion stage and have yet to reap the benefits of growing consumption of 4G mobile broadband services. Investment in 5G may simply not be on the agenda right now.

India has generally been a late adopter of any new technology, but the government is hopeful of changing this with 5G. Besides setting up a fund for a 5G test bed in Madras, authorities last year formed a high-level committee to develop India-specific 5G services and spur the development of a 5G ecosystem in India. (See India Steps Up Its 5G Efforts and India's Long Road to 5G.)

Telcos such as Airtel have also started exploring 5G technologies including massive MIMO and carrier aggregation. In addition, they are assessing moves to cloud-based and more distributed network architecture, which may be necessary if operators are to take full advantage of 5G services.

In that regard, RJio may have the edge. As the youngest network operator in India, it has already taken advantage of the latest equipment and built an all-IP network. That means it can avoid much of the modernization that will be required within other telco operations. Media reports now indicate that RJio plans to launch 5G within six months of the spectrum auction.

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However, there are multiple challenges on India's road to 5G. The most glaring is the financial health of the sector. Telcos are toiling under a huge debt load of INR8 trillion ($112 billion). And profit margins are being squeezed at every company apart from RJio.

What's more, the 5G use case is still not entirely clear. Proponents talk up its attractions for enterprise customers, but the 5G standards that would support these enterprise services are still not ready, and telcos will have to work closely with vertical markets on service development. In the meantime, in the absence of consumer applications that require faster-than-4G connections, it is hard to see why the average customer would cherish 5G over today's technology.

Finally, there are the devices. Right now, the 5G devices ecosystem is far from ready and device makers including Samsung, Vivo, Huawei, Oppo and Xiaomi do not expect gadgets to become widely available until late 2019 at the earliest.

So while the government is keen for a speedy 5G launch, circumstances on the ground could make that vision extremely hard to realize.

— Gagandeep Kaur, contributing editor, special to Light Reading

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