India has taken two major decisions for the country’s telecom sector. On Wednesday, It has cleared the Department of Telecommunications’ proposal to auction spectrum worth $52 billion in March 2021. It has also announced setting up the ‘National Security Directive’ to secure the country’s telecom infrastructure by designating a ‘trusted source’ for telecom operators’ purchase of equipment.
The decision to establish the National Security Directive may impact Chinese telecom gear vendors, especially Huawei and ZTE that are being scrutinized worldwide over spying concerns.
The US, for example, has accused Huawei of spying for China. The US government has been asking all countries to ensure that only ‘trusted vendors’ participate in any part of their future 5G networks.
Industry watchers said that India has adopted a strategy similar to the US to just allow trusted equipment providers.
Bharti Airtel has already started the process to reduce its exposure to Huawei and ZTE by replacing both Chinese vendors in several telecom circles. It has also started awarding wireline contracts to US and European vendors like Cisco, Ciena and Nokia.
India’s latest move will impact Vodafone Idea which has high exposure to Huawei and ZTE. The telco is currently going through a severe shortage of cash.
“Considering the need to ensure India’s national security, the Cabinet has accorded approval for the National Security Directive on Telecommunication Sector,” India’s Telecom and IT Minister Ravi Shankar Prasad said on Wednesday.
Prasad said that the methodology to designate trusted products will be devised by the designated authority, the National Cyber Security Coordinator, which will declare a list of trusted sources and trusted products for installation in the country’s telecom network.
India telecom service providers will now be required to deploy new equipment and devices that are designated trusted products.
As per an official notification, the National Security Directive will not affect ongoing Annual Maintenance Contracts (AMC) or updates to existing equipment already deployed in the country.
“The Department of Telecom will suitably modify its guidelines and ensure monitoring of compliance by Telecom Service Providers….the Designated Authority will put in place a portal for easy upload of applications by telcos and equipment vendors. It will improve ease of doing business through providing a predictable assessment methodology to telcos and equipment vendors,” the government said.
Spectrum auctions crucial for Reliance Jio
During a media briefing, Prasad said that the Indian Cabinet headed by the Prime Minister Narendra Modi had approved the next round of spectrum auction where a total of 2251.25 MHz spectrum in 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300 MHz and 2500 MHz bands. 2251.25 MHz will be put up for sale. “We will issue a notice inviting applications within this month.”
The March auction is extremely crucial for India’s top telecom operator, Reliance Jio, whose permits in the 800 MHz band are expiring next year in 12 circles. Jio also uses RCom’s spectrum in the same band, which is also expiring in 14 circles. Both companies have a spectrum trading agreement.
Reliance Jio has 406 million customers in India.
Airtel and Vodafone Idea’s spectrum licenses in 1800 Mhz band also expire in 2021 in eight circles. However, both telcos have backup spectrum available, and expiring licenses carry lesser quantities of spectrum.
Airtel and Vodafone had asked the Indian government to defer 4G auction, which was opposed by Reliance Jio.
India has already deferred 5G spectrum auction to sometime in 2021 due to Vodafone Idea and Bharti Airtel’s financial health and an underdeveloped local ecosystem around the 5G technology. It has earmarked spectrum in the 3,300-3,600 MHz band or the mid-band for the next-generation 5G service.