India may have finally realised it needs to reduce 5G spectrum base price

India 5G spectrum price
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India may finally give in to local telecom operators’ demand to lower the base price of the 5G spectrum, which could pave the way for better competition during the 5G auction next year. 

India has earmarked spectrum in the 3,300-3,600 MHz band or the mid-band for the next-generation 5G service. 

Local government officials are of the view that telecom operators will have to shell out more for buying non-Chinese 5G gear, which will increase the overall network deployment cost, thereby the authorities are now reassessing the base price for the 5G spectrum.

The possible move by the Indian government will make it viable for telecom operators like Bharti Airtel and Vodafone Idea to buy spectrum. Both telcos had conveyed to the government about their inability to bid for the 5G spectrum if the government moves ahead with the suggested base price. 

“Procurement procedures are being reworked, surveillance has become a global issue and companies such as Huawei and ZTE whose ownership is questionable are going to increasingly find it tough to get contracts,” a government official directly involved in the matter was quoted as saying by India’s Economic Times.

India is mulling over banning Chinese gear vendors Huawei and ZTE from supplying 5G telecom equipment to local telecom operators when the spectrum is made available. 

In the absence of these Chinese vendors, telecom operators would need to choose from Nokia, Ericsson, and Samsung to procure 5G equipment. Such a move will increase network deployment costs by 15-20%.

“The government is aware of the cost implications, especially as the two Chinese companies have historically offered the lowest rates for telecom equipment,” the government official added.

Notably, India’s largest telco Reliance Jio claims to be one of the few “Chinese gear free” telcos in the world. It has already conveyed to authorities about its plan to adopt its own 5G technology for commercial deployment.

India has already deferred 5G spectrum auction to sometime in 2021 due to the financial health of telecom operators like Vodafone Idea and Bharti Airtel, and an underdeveloped local ecosystem around the 5G technology. However, the country’s Department of Telecommunications (DoT) will go-ahead with 4G spectrum auction within this fiscal.

A recent report by the country’s finance ministry also found that the current 5G spectrum price suggested by the Department of Telecommunications (DoT) was too high. “…providing inclusive and affordable 5G services to all sections of the population in the country is important to achieve the NDCP goals. For this, the participation of the private players in the 5G auction should be robust,” the task force said in its report.

India’s telecom department (DoT) had fixed 5G spectrum price last year based on sector regulator, the Trai’s recommendations in August 2018. The Trai had suggested that Rs 492 crore or $71 million should be the base price for per MHz of 3,300-3,600 MHz band, which will be used for providing 5G services in India.

The Indian government was aiming to fetch as $70.9 billion from the auction of 8,300MHz of 4G and 5G spectrum, including 4G spectrum in the 700MHz, 800MHz, 900MHz, 1800MHz, 2100MHz, 2300MHz and 2500MHz bands, along with 5G spectrum in the 3300-3600MHz range.

Indian telecom operators like Airtel and Vodafone Idea informed the government that 5G service requires a minimum of 100 Mhz spectrum in the 3.5 GHz band for each operator. 

However, reports suggest that there is still uncertainty over the availability of the right amount of spectrum for 5G service.

Indian telecom operators are currently awaiting spectrum for 5G field trials in the country, having officially submitted applications with the Department of Telecommunications. 

Both Airtel and Reliance Jio have officially confirmed their preparedness for trials.

Bharti Airtel, in its annual report, revealed that it is working with telecom vendors and application developers to conceptualize 5G trials. It is focusing on 5G use cases like enhanced Mobile Broadband (eMBB) and several other industrial use cases and applications.

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