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Economy5G spectrum in India explained as auction goes on

5G spectrum in India explained as auction goes on

India has been awaiting 5G telecommunication and internet connection for years together and the auction for the spectrum for these services began in the country on 26 July after it got the union cabinet approval on 15 June. Even as about 72,000 MHz under nine bands are up for sale with a validity period of 20 years, people are asking how they will benefit from this technology.

The cabinet has permitted non-telecom service providers to bid for spectrum to set up captive 5G networks.

What is a spectrum and how does it work?

It's an electromagnetic spectrum, which is the word in physics for a range of radio wavelengths or frequencies of airwaves that carry information wirelessly for a gamut of services including telecommunications.

Spectrum can be divided into bands ranging from low frequency to high frequency, which determines their usage and is useful in allocation.

What does that mean for the user?

Technically, a low-frequency wave is one that repeats fewer times in a given time interval and a high-frequency wave repeats faster. High-frequency waves carry more data and are faster than lower-frequency waves but can be blocked or obstructed easily. Lower-frequency waves can provide wider coverage.

To draw analogies from nature, there are sounds that elephants and whales release that are so low-frequency that we humans cannot hear them but they reach the herd many miles away. At the same time, animals that squeak can be heard sharp and clear at a short distance but the sound does not travel far. A 'meow' of a cat can be heard clearer at a short distance than the 'moo' of a cow, but the moo would cover a greater distance while the meow would not. In a duet song, a typical woman singer can be heard clearer inside a hall or room whereas the male singer can be heard clearer from miles away if the song is being played in an open space.

What spectrums do companies need to provide their telecom services?

For telecommunication, spectrum in the 400 MHz to 4 GHz range is optimum, says the GSM Association, an organisation that represents the interests of mobile network operators.

Where did the cellular telecommunication journey begin?

This was the first generation of cell phone technology. The very first generation of commercial cellular networks was introduced in the late 1970s with fully implemented standards being established throughout the 1980s. It was introduced in 1987 by Telecom (known today as Telstra),

Australia received its first cellular mobile phone network utilising a 1G analogue system. 1G is an analogue technology and the phones generally had battery life and voice quality was large without much security, and would sometimes experience dropped calls. These are the analogue telecommunications standards that were introduced in the 1980s and continued until being replaced by 2G digital telecommunications. The maximum speed of 1G is 2.4 Kbps.

What are the classifications in terms of frequencies for the operators?

Operators can provide 2G (G = generation), 3G, 4G, and 5G services using one frequency band if they have enough spectrum.

For mobile technology in India, 2G services use the 900 MHz and 1800 MHz bands.

3G range: 900 MHz and 2100 MHz
4G range: 850 MHz, 1800 MHz, 2300 MHz and 2500 MHz
5G range: 3.5MHz and 700 MHz bands

Operators may use other bands if available with them in some capacity for the provision of these networks.

The 900 MHz band, which has been in use for mobile communications for over 20 years, has a superior commercial ecosystem with better-developed technology standards. It is suitable for offering GSM-based voice calls as well as 4G broadband services. After 900 MHz, the band suitable for GSM is 1800 MHz, which is also the core band used globally for LTE (long-term evolution), a 4G mobile communications standard.

5G spectrum bands can be clubbed into low, mid and high spectrum buckets.

In a low band spectrum, with less than 1 GHz (600 MHz,700 MHz, 800 MHz and 900 MHz), a blanket coverage caters to thousands of customers located far away with fewer towers dotting the area. These bands are ideal for wide and in-building coverage. When bundled with high-spectrum bands, they can be used for commercial mobile and broadcasting services.

The mid-band spectrum ranges from 1 GHz to 6 GHz (1800 MHz, 2100 MHz, and 2300 MHz) and provides coverage as well as the capacity to 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, which are ideal for speedy networks over short ranges. However, this range is subject to interference from dense objects.

What additional features do consumers get as the telecommunication technology upgrades from the second to the third, fourth and fifth generations?

When you connect to the internet, the speed of the connection depends on the signal strength that has been shown in alphabets like 2G, 3G, 4G etc right next to the signal bar on your home screen. Every generation is defined as a set of telephone network standards that detail the technological implementation of a particular mobile phone system. 

The speed increases and the technology used to achieve that speed also changes. For example, 1G offers 2.4 kbps, 2G offers 64 Kbps and is based on GSM, 3G offers 144 kbps-2 Mbps whereas 4G offers 100 Mbps – 1 Gbps and is based on LTE technology.

What is at stake in the 5G spectrum auction?

There are nine bands and over 72,000 MHz in the spectrum on offer in this auction. The bands on offer are in the 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 3.3 GHz, and 26 GHz range.

These bands can help operators strengthen their network coverage. They can optimise the current spectrum holdings. It will be important for operators to balance their planned investments with the potential benefits of each band.

The 700 MHz band is an important low-frequency 5G band that needs fewer towers. However, as per industry experts, a minimum chunk of 15 MHz of this frequency may be needed for its best use and that would cost Rs 60,000 crore.

Two of the bands, 700 MHz and 600 MHz, have the same reserve price and will account for 50% of the value of the entire spectrum to be auctioned at the reserve price. These are new bands and telcos stand to benefit more by topping up their existing low spectrum bands of 800 MHz and 900 MHz. These will strengthen their 4G services and can eventually be re-farmed for 5G use.

How do we know what the auction-winning companies would offer would be the best for consumers?

In this country, it's the government that allocates airwaves to companies or sectors for their use following a transparent auction aimed at choosing the best balance of price and quality out of all the bidders. It is no longer the first-come-first-serve policy that led to the 2G spectrum scam.

The government auctions a fixed amount of spectrum within specified band/s to be utilised by operators for providing communication and network services to consumers.

Operators may already have acquired some amount of spectrum in different bands from previous auctions, including those to be offered in the upcoming auction, which they might buy to consolidate their airwave holdings. Getting contiguous spectrum in minimum blocks of 5 MHz or more facilitates high-speed data processing.

What is different for the business?

Out of the nine bands on offer, the 600 MHz, 700 MHz, 3.3 GHz and 26 GHz bands have never been allocated. This time, two new caveats apply the removal of spectrum usage charges (SUC) and the unprecedented allocation of spectrum to enterprises for the deployment of private networks. SUC is a percentage of adjusted gross revenue that operators pay the department of telecom.

The DoT estimates that winning 40 MHz of spectrum in the mid-band (3300 MHz) and 400 MHz in the mm-wave band (26 GHz) will likely result in an 86% decrease in SUC for operators.

What can be expected from the auction?

Demand and cost will drive the bidding strategy of the firms. However, clubbing the spectrum into 4G and 5G critical bands may help understand the differences better.

The strategy for 4G bands is easier to decipher. Operators will focus on optimising their existing holdings, with 800 MHz, 900 MHz and 1800 MHz bands likely getting the most traction.

Reliance Jio Infocomm stands to gain the most in 800 MHz because it has the highest existing spectrum in this band. It would make sense for Mukesh Ambani's company to focus on creating a strong position here and maintain maximum market share.

Bharti and Vi may look forward to the 900 MHz band for the same reason. All three private operators may bid for some spectrum in the 1800 MHz band.

In the remaining bands mostly used for 4G, there is a possibility of bidding, particularly by Bharti and Vi, which hold a majority of the existing positions in these bands. However, since the outlay in these bands would also be significant, they might acquire more of the 3.3 GHz spectrum.

The 600 MHz and 700 MHz bands are low-frequency bands that can play a critical role in supplementing the mid-band portfolio, providing better indoor penetration and a larger footprint. However, the chances of telcos bidding for them are slim because they are priced relatively quite high, especially the 600 MHz band, which globally costs about one-third of the 700 MHz band. Operators may give both bands a miss on the expectation that they will be made available at a reduced price in a future auction.

The major 5G bands consist of the remaining two bands i.e. the 3.3 GHz, also called the C-band, and 26 GHz, also called the mm-wave. The mm-wave is the cheapest spectrum available yet, and it would make sense for telcos to acquire the maximum units possible under this in a bid to reduce their overall SUC charges.

The bidding strategy for the C-band, the major 5G band, remains a bit foggy because it is considered quite expensive, especially in light of the decision to allocate it to enterprises for private networks, which might result in subdued revenue potential for telcos.

Some benefits might offset these concerns such as zero SUC and relaxed payment terms.

There are 330 units or MHz available for allocation under this band, with a cap of 130 units per operator. Reliance and Bharti are likely to be the two main contenders for this band.

There are mixed expectations with regard to the outcome of the auction. It can be largely construed as harmonious for a majority of the airwaves, with the possibility of fierce competition for the major 5G bands.

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