The much-awaited mobile spectrum auction is scheduled to be held on June 6. In this two-part series, we analyse the current spectrum scenario in India.
A total of 11 GHz spectrum across 800, 900, 1800, 2100, 2300, 2500, 3300 MHz and 26 GHz will be auctioned at the total reserve price of about ₹96,000 crore. There is a surprise missing of 600 and 700 MHz bands in this auction, given that only 10 MHz of 25 MHz of paired spectrum in the 700 MHz was picked up in the last auction held in 2022.
This auction is mainly to cater to telcos whose spectrum licenses are expiring soon in the 800, 900 and 1800 MHz bands across various Licensed Service Areas (LSAs). These spectrum blocks were assigned, partly administratively during 2003-2008 — prior to the first conduct of Simultaneous Multiple Round Ascending auction that was held in 2010.
The sub-GHz bands
The sub-GHz bands – 800 and 900 MHz – are very important for the telcos to keep as these have excellent propagation characteristics and hence are mainly deployed in semi urban and rural areas. Though 800 MHz is ideal for deploying 4G Long Term Evolution (LTE) networks, both 600 and 700 MHz bands are ideal substitutes supporting 5G New Radio requirements.
By not putting on the table, these bands, the telcos are tight roped into acquiring 800 and 900 MHz for renewals, especially those who do not have 700 MHz spectrum from the last auctions.
In accordance with this Vodafone Idea and Bharti Airtel have already extended their holding of these bands in certain LSAs. In the other areas, these bands are expected to see some traction especially from Airtel and Vodafone Idea.
The mid-band
As in the 800 and 900 MHz bands, the telcos are also facing renewal of 1800 MHz. However, prior to 2014, much of this band was held by the Department of Defence and hence telcos did not have much holding.
However, subsequent to Defence migrating to optic fibre networks and the refarming exercise, substantial amount of spectrum in this band was auctioned and picked up during 2014-2022 auctions. Hence we cannot expect much action in the 1800 MHz band.
About 335 MHz in the other mid band – 3300 MHz – is put on block. However about 75 per cent of the 7,260 MHz auctioned in this band was picked up in 2022 auction. Further, there is no regulatory clarity on the method and pricing of spectrum in this band for Captive Non-Public Networks for construction of private enterprise network. Though this band is ideally suited for enterprise networks, telcos have enough of this band to show any interest in this auction.
The millimeter wave band
The 26 GHz millimeter wave band that is ideally suited for 5G networks witnessed a good uptake in the last auction with about 45.35 GHz have been acquired out of a total of 62.7 GHz put on block. Out of the remaining amount, only 8.7 GHz are put on block in this auction. Though the reasons for this reduction in availability is not clear, it is very unlikely that the bidding in this band is likely to be active.
In the last auction, none of the offerings were sold above the reserve price, except for the 1800 MHz in UP(East), that witnessed about ₹29 crore/block, a 60 per cent increment over the reserve price.
All in all, out of 72 GHz of spectrum put on block, only 51 GHz has been sold, leaving about 30 per cent of the spectrum unsold. The total realised value is about ₹150,000 crore, which is about 35 per cent of the expected value at reserve price of ₹430,000 crore. Continuing this trend, even this year we are likely to see a muted auction with some activity in the 800 and 900 MHz.
Current spectrum holding
It is interesting to note that existing spectrum holding of Bharti Airtel and Reliance Jio are about 38 and 46 per cent respectively, essentially indicating a duopoly in spectrum holding. Despite indications from the government that spectrum in various bands will be allocated to the state-owned BSNL and MTNL, the spectrum holding especially of BSNL is only about 2 per cent of total amount allotted.
The government has to clearly allot more spectrum to BSNL especially in the sub-GHz bands for it to operate efficiently in the rural and remote areas of the country.
However, with the government requiring the state-owned telcos to pay the winning bid price in the auction, it remains to be seen how BSNL will be able to afford the huge spectrum cost associated with the same.
It is to be noted that Indian telcos that were starved of radio spectrum until now, have acquired over the last decade enough spectrum, partially due to industry consolidation. The two major telcos — Bharti Airtel and Reliance Jio — have an average of about 1,000 MHz of spectrum in each LSA (also referred to as “spectrum depth”).
Though this is half of about 2,000 MHz spectrum depth of the US carriers such as Verizon, AT&T Wireless and T-Mobile, the telcos cannot continue to cry that they are starved of spectrum.
It is time that they start improving quality of service. The Telecom Regulatory Authority of India (TRAI) has also pointed out its concern over poor quality of connections despite the telcos having deployed 5G networks.
The need of the hour is improved backhaul and fibre connectivity across cell towers to provide better end-to-end connectivity!
The writer is Professor at IIIT-Bangalore and visiting scholar at the University of Southern California; with inputs from KR Mahaadevan, M.Sc. student at IIIT-Bangalore