5g auction: 5G spectrum auction: Cabinet scraps upfront payment for bidders, allows allocation directly to pvt firms

The government Wednesday said that the Cabinet has cleared the much awaited auction of 5G airwaves which will begin on July 26, while deciding that the spectrum would be auctioned for a period of 20 years.

It has also scrapped the need for upfront payment for winning bidders, and allowed companies to pay in equal annual installments over 20 years.

In a big setback for telcos and won for tech companies, the Cabinet also allowed enterprises to directly obtain spectrum from the DoT for setting up captive private networks.

The Cabinet approval paves the way for what will be the country’s biggest spectrum sale. The government plans to auction 5G airwaves end-July and is targeting the first 5G call by the August-September timeframe.

The Centre plans to offer “a total 72 Ghz 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” the government said in an official statement.

“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 government said.

The airwaves, at the reserve prices recommended by the telecom regulator, are valued at around Rs 5 lakh-crore.

The Cabinet also decided to enable 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.

To meet backhaul demands, it has also decided to provisionally allot 2 carriers of 250 MHz each in E-band to the Telecom Service Providers.

The Cabinet also decided to double the number of traditional Microwave backhaul carriers in the existing frequency bands of 13, 15, 18 and 21 GHz bands.

Last month, the Digital Communications Commission (DCC) – an inter-ministerial panel that is the top decision-making wing of the DoT – had largely stuck to the regulator’s recommended base prices for 5G airwaves, while backing a telecom department panel view of auctioning airwaves for 20 years.

On April 11, Trai had recommended a reserve price of Rs 317 crore a unit for airwaves in the premium 3.3-3.67 GHz 5G band (also known as C-band), a 36% reduction to its last recommendation in 2018. It had also cut the recommended price for the coveted 700 MHz spectrum by 40%, to Rs 3,297 crore a unit. On average, Trai cut prices across bands by around 39%.