In a major boost to the telecom sector, the union cabinet on Wednesday approved a proposal to conduct the auction for 5G airwaves to roll out next generation telecom services later this year, which would be about 10 times faster than 4G. The cabinet also gave nod to the development and setting up of private captive networks to spur a new wave of innovations in industry 4.0 applications such as machine to machine communications, internet of things (IoT), artificial intelligence (AI) across automotive, healthcare, agriculture, energy, and other sectors.

“The Union Cabinet chaired by the Prime Minister Narendra Modi has approved a proposal of the Department of Telecommunications to conduct a spectrum auction through which spectrum will be assigned to the successful bidders for providing 5G services to public and enterprises,” according to an official statement issued by the Cabinet on Wednesday.

A total of 72,097.85 MHz of spectrum, with a validity period of 20 years, will be put to auction to be held by the end of July 2022. The auction will be held for spectrum in various low (600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz), Mid (3300 MHz) and high (26 GHz) frequency bands.

“It is expected that the mid and high band spectrum will be utilised by telecom service providers to roll-out of 5G technology-based services capable of providing speed and capacities which would be about 10 times higher than what is possible through the current 4G services,” as per the release.

In a bid to facilitate ease of doing business, the cabinet also announced various progressive options with regard to the spectrum to be acquired by bidders through the forthcoming spectrum auction. For the first time ever, there is no mandatory requirement to make upfront payment by the successful bidders. Payments for spectrum can be made in 20 equal annual instalments to be paid in advance at the beginning of each year. “This is expected to significantly ease cash flow requirements and lower the cost of doing business in this sector. The bidders would be given an option to surrender the spectrum after 10 years with no future liabilities with respect to balance instalments,” the release highlights.

According to the cabinet statement, the spectrum auction will be benefitted by the telecom sector reforms announced in September, 2021. The reforms include zero Spectrum Usage Charges (SUC) on the spectrum acquired in the upcoming auction, providing a significant relief to the service providers in terms of the operating cost of telecom networks. Further, the requirement of submitting a financial bank guarantee equivalent to one annual instalment has also been done away with, it adds.

The release notes that the upcoming 5G services have the potential to create new age businesses, generate additional revenue for enterprises and provide employment arising from the deployment of innovative use-cases and technologies.

The availability of sufficient backhaul spectrum is also necessary to enable the roll-out of 5G services. Backhaul spectrum is different from access spectrum and is used by the telecom companies to connect their different sites. To meet the backhaul demand, the cabinet has decided to provisionally allot 2 carriers of 250 MHz each in E-band to the telecom service providers. It has also proposed to double the number of traditional Microwave backhaul carriers in the existing frequency bands of 13, 15, 18 and 21 GHz bands.

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