The Department of Telecommunications (DoT) has set minimum rollout obligations for the 5G spectrum that will be put into auction later this year. The next round of spectrum auctions will take place on May 20, 2024, in India. Just like the previous auction, the spectrum that telcos bid for this time will have to be deployed within a certain time frame to avoid penalties from the telecom department.
The telecom department sets deployment obligations because the spectrum is a natural resource and that too very scarce. Thus, it should be utilised in the best manner possible. No telco should just bid for it and let it stay idle because the spectrum is meant to be used for public services.
Here are the minimum rollout obligations set by the DoT.
Read More - Spectrum Auction 2024: DoT Excludes 700 MHz Frequency Band, Get all Details Here
Minimum Rollout Obligation for 5G Spectrum (Spectrum Auction 2024)
The 5G spectrum that will be up for bidding in the upcoming spectrum will be 3.3 GHz and 26 GHz frequencies. For the 3.3 GHz frequencies, the DoT has said that in LSAs (licensed service areas) other than the metros, the telcos will have to follow the minimum rollout obligations as mentioned below:
| Time Period | Roll Out Obligations (per LSA) | Minimum number of towns to be covered using targeted sites (per LSA) |
| Phase-1: By the end of 1st year | Commercial launch of services in at least 1 city in the LSA | 1 |
| Phase-2: By the end of 3rd Year | Cumulative number of sites to be deployed: Category A LSAs: 700 Category B LSAs: 460 Category C LSAs: 260 | In Category A LSAs: 14 In Category B LSAs: 9 In Category C LSAs: 5 |
| Phase-3: By the end of 5th Year | Cumulative number of sites to be deployed (at least 5% of the sites to be in rural SDCA, including economic zones): Category A LSAs: 2000 Category B LSAs: 1400 Category C LSAs: 940 | In Category A LSAs: 40 In Category B LSAs: 28 In Category C LSAs: 19 |
For the 3.3 GHz spectrum, the minimum rollout obligation for the metro LSAs is:
| Time Period | Roll Out Obligations (per LSA) |
| Phase-1: By the end of 1st year | Commercial launch of services anywhere in the LSA |
| Phase-2: By the end of 3rd year | Cumulative number of sites to be deployed in each LSA: 280 |
| Phase-3: By the end of 5th year | Cumulative number of sites to be deployed in each LSA: 920 |
So to conclude, for the 3.3 GHz spectrum, by the end of first year, the telcos will have to launch it in one city/town at least in each of the LSAs, and for the metros, it should be available at least in one area. The phase 2, which is the end of year 3, the telcos will have to ensure that their deployment is wider in all the categories of LSAs (A, B and C) for both the non-metro and metro LSAs. The minimum number of sites and cities to be covered are mentioned in the table above. You can also see that by the end of phase-3, which is 5th year, telcos will have to expand the coverage even further with more sites.
The telecom department has said that for the 3.3 GHz spectrum, in non-metro LSAs, at least 5% of the sites deployed should be in rural areas, including economic zones by the end of phase 3 or year 5.
For the 26 GHz spectrum, the minimum rollout obligation for non-metro LSAs is:
| Time Period | Roll Out Obligations (per LSA) | Minimum number of towns to be covered using targeted sites (per LSA) |
| Phase-1: By the end of 1st year | Commercial launch of services in at least 1 city in the LSA | 1 |
| Phase-2: By the end of 3rd Year | Cumulative number of sites to be deployed: Category A LSAs: 240 Category B LSAs: 150 Category C LSAs: 80 | In Category A LSAs: 2 In Category B LSAs: 1 In Category C LSAs: 1 |
| Phase-3: By the end of 5th Year | Cumulative number of sites to be deployed (at least 5% of the sites to be in rural SDCA, including economic zones): Category A LSAs: 660 Category B LSAs: 460 Category C LSAs: 300 | In Category A LSAs: 7 In Category B LSAs: 5 In Category C LSAs: 3 |
For the metro LSAs, the minimum rollout obligation for the 26 GHz spectrum is:
| Time Period | Roll Out Obligations (per LSA) |
| Phase-1: By the end of 1st year | Commercial launch of services anywhere in the LSA |
| Phase-2: By the end of 3rd year | Cumulative number of sites to be deployed in each LSA: 90 |
| Phase-3: By the end of 5th year | Cumulative number of sites to be deployed in each LSA: 300 |
Through this, you can understand that for the 26 GHz spectrum, the telcos will have to ensure deployment in at least one city in each of the LSAs before the end of year 1 and for the metro circles, the commercial launch needs to happen at least somewhere in the LSA. If you follow the table, you will see that for phase-2 (end of year 3) and phase-3 (end of year 5), the coverage needs to expand signficantly.
What if Telcos Fail to Meet Minimum Rollout Obligations?
If in case, any of the licensees or the telco who acquired the spectrum from DoT fails to meet the minumum rollout obligations, then these are the penalties applicable:
- Rs 1 lakh per week for the first 13 weeks
- Rs 2 lakh per week for the next 13 weeks
- Rs 4 lakh per week for 26 weeks subject to a maximum amount of Rs 1.40 crore for each phase
In case there's a delay for more than 52-weeks, then DoT gets the power to impose the maximum amount of penalty as well as withdraw the spectrum assigned to the telco/licensee. Further, the bank guarantee (BG) submitted will be encashed to the extent of the penalty amount if the same is not paid by the licensee or the telco in the specified time period.
Read More - Vodafone Idea 5G Deployed in Select Circles to Meet Govt Obligation: Report
What Happens to Jio and Airtel, Who have Already Met Minimum Rollout Obligations Once?
Note that the government has said that any existing licensee who has met the rollout obligations of the respective bands in the previous auction will not have to meet them again for additional spectrum purchased in the same bands. So Airtel and Jio will not have to meet the phase-1 (end of year 1) rollout obligations again for any additional spectrum they acquire in the 3.3 GHz or 26 GHz (5G spectrum bands used in India) bands. However, Vodafone Idea (Vi) and Adani Data Networks, or any new licensee that acquires the spectrum, will have to meet all the obligations as they have not yet met them.
