The Union Cabinet last week cleared the decks for the first auction of radio spectrum to facilitate the roll-out of 5G telecommunication services. The Department of Telecommunications promptly issued a 159-page ‘Notice Inviting Applications’, detailing the specifics of the auction including the frequencies that would be up for bidding starting on July 26, and their reserve prices. The speed with which the Government has moved — from the initial announcement in the Union Budget to the telecom regulator’s recommendations, and finally notification of the auction — has been commendable and shows its keenness to ensure India is at the relative vanguard in the adoption of the potentially ‘transformative’ technology. The Government has underscored that its primary motivation is to boost digital connectivity, a laudable objective given that the rapid growth of wireless telephony has perceptibly helped improve the delivery of services such as mobile banking, online education and telemedicine. The rub, however, is in the details. While most of the specific frequency bands that telecom providers consider optimal for the introduction of 5G services have been made available, including in the sub 1 GHz range, a C-Band frequency of 3.3 GHz, and the higher 26 GHz, the Government’s decision to set the reserve price for the spectrum based on the regulator’s recommendations reveals a prioritisation of revenue over the industry’s long-term health. Even considering that an option for a staggered annual pay-out of the licence fee over its 20-year term has been provided, the price is still high.
This is particularly so when one considers the level of financial stress that has shrunk the sector to a near duopoly, and forced the surviving operators to resort to tariff increases to protect their viability and ability to make future investments. With 5G’s adoption for the various possible end uses that leverage machine-to-machine communication such as IoT, smart agriculture, smart homes and others that bank on reliability, including smart grids and autonomous vehicles, still in its relative infancy even in advanced economies, the technology is yet some years away from scale-based economic viability. The relatively small size of the market for just faster downloads of videos and games, especially at a higher cost, makes it near certain that service providers will take an ultra-cautious approach both to bidding for spectrum and in rolling out services. The Cabinet’s decision to allow bids for starting Captive Non-Public Networks that would enable individual companies to run private networks within the isolated confines of the enterprise has also roiled the pitch. It is hard to imagine the urgency to open up 5G for this niche application, particularly as it further undermines the economics for traditional telcos. India must be conscious of the challenges and opportunities of 5G services, and ensure that the technology caters to the largest sections of the population and not remain a deliverer for a high-value but limited, premium segment.
