On Wednesday, the government announced the spectrum auction for India. This particular auction set for July 26 will pave the way for the 5G rollout in the country. There were a lot of key details announced by the Department of Telecommunications (DoT) that are going to affect the telcos directly.
Charu Paliwal, a research analyst at Counterpoint Research, told TelecomTalk that the announcement of the spectrum auction was a mixed outcome for operators.
“There are certainly mixed outcomes for operators from the latest development on the spectrum auction process. The government decision on scrapping the mandatory requirement of upfront payment; spectrum payment can be made in 20 equal annual instalments, and the option of surrendering the spectrum after ten years are steps taken in the right direction,” Paliwal said.
In the Notice Inviting Application (NIA) for the 5G spectrum auction, the DoT said that telcos would be able to surrender the spectrum after ten years of purchase. It is worth noting that the telcos won’t be able to bid again for the surrendered airwaves for the next two years. Further, if there’s any pre-payment related to the surrendered spectrum, it won’t be refunded.
Not Every Enterprise Will be Setting Up its Own Private 5G Network
In the announcement, the DoT said that enterprises would have the flexibility of getting their captive private 5G networks set up by the telcos, or they can do it themselves by taking spectrum from the government.
While the industry sees it as a big loss, Paliwal believes that not every enterprise would be looking to set up its own private network. Further, as per the analyst, telcos will still have a role to play in the private networks set up by the enterprises.
“Operators are dissatisfied with the govt.’s decision to allow direct allocation of spectrum to non-telcos. They view this as a loss of potential enterprise revenue, which is touted as a major revenue driver for 5G technology. Private networks can be deployed in manufacturing plants or can also work as campus networks in large office spaces, universities etc.”
“Enterprises intend to buy spectrum license for private networks as it gives them better control of the networks and guarantees to manage solutions/operations as per the changing business needs. Different enterprise has different needs, and not every enterprise will find it feasible to buy spectrum license and rather opt for the operator route to deploy the network. Plus, there is a whole set of technologies and applications that come along with private networks, and operators will have a role to play in the value chain,” Paliwal added.
To give context, Paliwal quoted some examples of the international markets which are allowing enterprises to get spectrum directly from the government for private 5G networks.
“There are several other markets such as Germany, Spain and others to set aside spectrum for enterprise private networks. The government's decision to allow enterprises to get spectrum is aligned with the global market. This is the time for operators to capture the growing interest of enterprise in digitalization as well as build a robust partner ecosystem to cater to industry vertical-specific needs.”