5G auction today: What’s up for sale? Which companies are in the race?

India’s 5G auction starts today and four companies are bidding: Reliance Jio, Bharti Airtel and Vodafone Idea. The fourth contender is Indian billionaire Gautam Adani, whose entry came as a surprise

FP Explainers July 26, 2022 11:22:42 IST
5G auction today: What’s up for sale? Which companies are in the race?

The 5G auction starts today. By the end of 2027, 5G is expected to account for almost 40 percent of mobile subscriptions in the country. AFP

It’s a giant step forward in the telecommunication sector. India’s 5G auction has kicked off today ahead of the planned rollout in 2023. About 72,000 gigahertz are up for bidding under nine bands with a validity of 20 years.

The Union Cabinet approved the auction on 15 June, allowing non-telecom service providers to bid for spectrum to set up 5G networks.

The bidders inclued the three major mobile operators in India: Reliance Jio, the market leader, Bharti Airtel and Vodafone Idea. The fourth contendor is Indian billionaire Gautam Adani, whose interests until now have been in largely in infrastructure.

What is 5G and why is it such a big deal? And who are the bidders for today’s auction? We answer all the questions.

Also read: 5G, its significance to India, and the controversies surrounding it

What’s a spectrum?

Spectrum refers to the invisible radio frequencies that can carry wireless information for a range of services including telecommunication. The wireless signals are what allow us to make calls from our mobile devices, tag friends on social media, and hail a cab using an app.

The government allocates airwaves to companies or sectors for their use. Spectrums are further divided into bands – from low frequency to high frequency.

High-frequency waves carry more data and are faster; low-frequency waves provide wider coverage.

What spectrum do telecom companies require?

Spectrum in the 400 MHz to 4 GHz range is the most optimum for telecom, according to the GSM Association, an organisation that represents the interests of mobile network operators.

Operators can provide 2G, 3G, 4G, and 5G services using one frequency band if they have enough spectrum, according to moneyconrtol.com.

What is 5G?

5G or fifth generation is the latest upgrade in the long-term evolution (LTE) mobile broadband networks. According to United States-based semiconductors and wireless tech major Qualcomm, 5G is a global wireless network expected to deliver ultra-low latency (the delay users face as data make a round trip), increased reliability, more network capacity and availability.

5G internet services are believed to be about 10 times faster than its predecessor 4G. 5G services deliver up to 20 gigabytes per second (GBPS), peak data transfer speeds and 100+ megabytes (MBPS) per second, on average. It works in three bands: low, mid and high-frequency spectrum.

5G auction today Whats up for sale Which companies are in the race

5G promises super-fast download speeds that can support driverless cars and virtual reality. AFP

The low spectrum offers a maximum speed up to 100 MBPS and is suitable to serve thousands of customers over long distances with fewer towers. It has shown great promise in coverage, internet speed and data exchange. This means that while telcos can use and install it for commercial cellphone users who may not have specific demands for very high-speed internet, the low band spectrum may not be optimal for the specialised needs of the industry.

The mid-band spectrum ranges from one GHz to six GHz (1800 MHz, 2100 MHz, and 2300 MHz) and provides coverage and can carry more data while travelling significant distances. The high bands range from 24 GHz to 40 GHz and are also known as the millimetre wave spectrum. They are ideal for speedy networks over short ranges but this range is subject to interference from dense objects, according to a report in moneycontrol.

So what will be auctioned today?

Nine bands and 72,000 gigahertz are on auction today. The bands on offer are 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz, 3,300 MHz and 26 GHz.

“It is expected that the mid and high band spectrum will be utilised by telecom service providers to roll out 5G technology-based services capable of providing speed and capacities which would be about 10 times higher than what is possible through the current 4G services,” said the Union Cabinet in a statement issued last month.

Who are the bidders?

The auction is seeing the participation of four entities: Reliance Jio, Bharti Airtel, Vodafone Idea and Adani Data Networks, a subsidiary of the Adani Group.

They have submitted earnest money deposits (EMDs) — a key marker of bidding intent — to the Department of Telecommunications (DoT). Reliance Jio has put in Rs 14,000 crore, compared to Rs 5,500 crore by Bharti Airtel, Rs 2,200 crore by Vodafone Idea, and Rs 100 crore by the Adani Group, according to a report by The Indian Express.

The amount of airwaves that a company can bid for in the auction is reflected in EMD.

5G auction today Whats up for sale Which companies are in the race

The Adani Group, which has businesses in infrastructure, has entered the 5G race. PTI

What is expected of the auction?

The telecommunications department anticipates that the 5G auction will generate between ₹70,000 and ₹1,000,000 crore. According to analysts, Jio will spend the most money, followed by Bharti Airtel, with modest involvement from Vodafone Idea and Adani Group. With surplus spectrum available and only four bidders in the race, a heated bidding war is unlikely.

“Operators will bid for 5G networks, reducing SUC (Spectrum Usage Charges) rates and enhancing existing spectrum bands, resulting in demand mainly led by 3.3 GHz/26GHz spectrum bands,” brokerage firm Jefferies said.

Jio is expected to bid for the 700 MHz band, which is suited for consumer-related applications and can buy spectrum worth Rs 1,30,000 crore.

The Adani Group had clarified earlier that is not eying the 5G space and is participating in the auction to build captive private networks. The Indian Express points to a Credit Suisse report which said that Adani’s low EMD compared to the others “does indicate that its participation in the spectrum auction will largely be limited to the 26GHz band”, which is the “cheapest band for enterprise use cases”.

Airtel is expected to restrict its bidding in the 3.5 GHz and 26 GHz band, Credit Suisse said. Vodafone Idea “will be able to bid for the minimum required spectrum: ~50MHz in 3.5GHz band and 400MHz in 26GHz bands”, the report said.

How 5G will change India?

According to the government, the upcoming 5G services have the potential to create new-age businesses, generate additional revenue for enterprises and provide employment arising from the deployment of innovative use-cases and technologies. 5G promises super-fast download speeds that can back technologies like driverless cars and virtual reality.

In India, “5G is projected to account for almost 40 per cent of mobile subscriptions – 500 million – by the end of 2027,” according to a recent report by Ericsson, one of the leading providers of 5G equipment in the US, reports CNBC.

With inputs from agencies

Firstpost is part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

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