5G spectrum auction: A big step toward next-gen telecom

The 5G spectrum auction that concluded on Monday was a big step toward upgrading the telecom and internet experience in India to the next level and catch up with the likes of China, South Korea and the US.

Individual customers should soon be able to access faster internet speeds than till now, industries should be able to progress towards the ‘fourth industrial revolution’, and cities should be able to offer connected digital services. All of this should benefit society and economy overall.

All those who were involved in the auction are beneficiaries. The government has earned a revenue of Rs 1.5 lakh crore at a time when it needs money. It realised only 35 per cent of the reserve price but even this is more than what it expected.

The government softened some of its earlier positions to make the auction possible. It lowered the cost of acquisition for the operators, allowed payments in instalments, dropped the demand for bank guarantees, and waived spectrum usage charges.

It will get only part of the proceeds this year and will get the balance over the next 20 years. A total of 51,236 MHz of spectrum was acquired by the three incumbent operators Reliance Jio, Bharti Airtel and Vodafone Idea, and new entrant Adani Data Networks.

The operators went in for the spectrum that most suited them business-wise and did not overbid. Nearly 60 per cent of the spectrum sold by value was bought by Reliance Jio. It was the only one to buy spectrum in the expensive 700 MHz spectrum. Airtel bought almost 80 per cent of the volume of spectrum Jio did but paid much less because it avoided the 700 MHz spectrum.

Vodafone Idea bought a fourth of the spectrum that Jio got, but again spent much less. Adani bought very little, perhaps only to make a foray into the enterprise services space.

The spectrum auction is important as it will led to improved mobile broadband and positively impact everything from education and entertainment to tele-medicine and the evolving Internet of Things. In other countries where 5G services are available, they are not priced very high, and so it may not give any great boost to operators’ revenues in the initial years. It is likely that they will consider tariff hikes to make up for the high pay-out they are making for the 5G spectrum.

The operators in the sector are of uneven strength, and unhealthy competition among them can do harm to the sector and to the customers. It must be ensured that there are no unfair practices that will affect customers’ interests.