Explained | How will the 5G spectrum sale impact the sector?

When will the mass roll-out happen? Will better services help improve the debt situation of telecom providers?

The story so far: The auction of telecom spectrum, including bands for offering fifth generation (5G) technology services, concluded on Monday drawing record bids exceeding ₹1.50 lakh crore. Telecom Minister Ashwini Vaishnaw said 71% of the 72,098 MHz of spectrum on offer was sold. Reliance Jio emerged as the top bidder, staking claim for a period of 20 years to 24,740 MHz of spectrum. Bharti Airtel stood second with 19,867.8 MHz worth spectrum and Vodafone-Idea third with 6,228.4 MHz worth spectrum. The mop-up from the bids with respect to 5G airwaves was almost double in comparison to that of 4G last year. According to the telecom Minister, “Spectrum purchased is good enough to cover all circles in the country. [In the] coming two-three years, we will have good 5G coverage.” As per the Ministry, the roll-out of 5G services is likely to start by September/October.

Spectrum in three bands, namely, low (constituting of 600, 700, 800, 900, 1800, 2,100 and 2,500 MHz bands), mid (3,300 MHz) and high (26 GHz — 1 GHz equals 1000 Mhz) frequency bands were put up for auction.

Editorial | Dialling right: On 5G spectrum sale

Low-band spectrum is popular for providing wider coverage, however, the speed and latency might just be an incremental upgrade over 4G. Speed is subject to the proximity to the source. On the other hand, the high band spectrum can provide speeds of up to two Gbps but is unable to travel longer distances, at times, less than a mile. Additionally, signals from the low-band spectrum can travel through windows and walls which is not the case with the high-band.

The mid-band spectrum falls somewhere between the two. It can carry sizeable data over longer distances and maintain increased speeds.

The mid and the high-band garnered maximum attention at the auction with 76% and 72% of the available spectrum respectively sold. Bharti Airtel and Reliance Jio combined, staked claim to 87% of the total purchased spectrum in these two bands, strengthening their operational capability in the 5G market.

While making bids for spectrum, telcos take note of their existing financial position and priorities. Thus, not all spectrum on offer is acquired. For example, the 700 Mhz spectrum went unsold in 2016 and 2021. This time, Jio emerged as the sole entity to spend ₹39,270 crore on the ‘premium band’ known to improve indoor and rural coverage as well as possessing the ability to penetrate through walls and properties more effectively. Operators did not opt for this band previously because of their financial positions and high prices, focussing instead on alternate strategies.