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Roadmap for awarding 5G spectrum in India

Countries in the Asia Pacific region have been at the forefront of many mobile technologies, from the first 3G network launching in Japan to the first commercial 5G networks in South Korea, and also significant market changes, as encapsulated by rapidly decreasing average revenue per user (ARPU) and increasing uptake in India. The difference in the historic establishment of fixed telecommunications networks between countries has had some effect on the uptake of mobile – those countries with less fixed infrastructure are those where consumers benefit most from mobile broadband technologies – but all countries have seen a massive growth in the number of subscribers and the capabilities of mobile networks.

The capabilities of mobiles improve constantly, but roughly every 10 years a new generation of mobile technology comes along, bringing fundamental improvements to the capabilities of mobile networks and changes to spectrum management approaches.

The Government of India (GoI) launched the Digital India programme in 2015. The vision of the programme is to transform India into a digitally empowered society and a knowledge economy. The key vision areas of the programme are enhancing digital infrastructure, e-governance, and digital empowerment of citizens. In order to achieve these, it is clear that there must be a significant focus on ensuring all citizens are connected, and this leads to a number of infrastructure policies. This focus on digital infrastructure underpins the GoI’s National Broadband Mission which was launched in December 2019 and is based on the three principles (universality of broadband services to bridge the digital divide, affordability of broadband services and high-quality broadband access for all). To achieve these, the Government has set the following main outcomes for a five-year period since the launch of the mission.

  • All villages to have access to broadband by 2022.
  • Availability of high-speed broadband (up to 50 Mbps).
  • Increase fibre deployment from 22,000,000 to 50,000,000 kilometres, with a focus on deloying fibre to existing towers.
  • To increase tower density from 0.42 towers per thousand population to 1 per thousand population, in order to improve quality of service and better connectivity.
  • To increase the rate of fibre connection between the towers from current 30% to 70%.
  • To create a Geographic Information System (GIS) for assisting in the planned deployment and monitoring of fibre networks.
  • Roll out of 5G network and further strengthening the existing 4G network.
  • Promoting domestic manufacturing of telecommunications equipment (Make in India).

This broadly aligns with the National Digital Communications Policy (NDCP) which was determined in 2018. The NDCP aims to achieve the following strategic objectives by 2022:

  • Provisioning of Broadband for All.
  • Creating 4 million additional jobs in the Digital Communications sector.
  • Enhancing the contribution of the Digital Communications sector to 8% of India’s GDP from ~ 6% in 2017.
  • Propelling India to the Top 50 Nations in the ICT Development Index of ITU from 134 in 2017.
  • Enhancing India’s contribution to Global Value Chains.
  • Ensuring Digital Sovereignty.

Furthermore, the Department of Telecommunications (Dot) has reportedly been looking into updating the telecommunications legal framework by replacing the 1885 Telegraph Act and the 1933 Indian Wireless Telegraphy Act before the launch of 5G. This initiative aims at addressing gaps in the legislation that could hold back the development of 5G in the country. We understand that the DoT is working with the National Law University in Delhi which has been tasked with the study of the current acts and the elaboration of potential amendments.

Overall, the government of India has a clear strategic vision to improve connectivity for its population, including the availability of 5G and making efficient use of existing LTE networks. There have been defined moves to ensure that fibre networks are in place to support 5G connections, although further work should be done to ensure access to spectrum for microwave links – including E-band spectrum – for areas where fibre backhaul is not available or needs support.

However, to date there have been a number of delays in allowing operators to enact these policies. In particular, and most relevant for this study, there have been significant delays in awarding new spectrum for 5G, against concerns of overly high spectrum fees, and licencing issues have prevented large-scale 5G deployment in existing bands.

In addition, while LTE adoption has been strong in India, there are still a very large number of subscribers continuing to use 2G connections, likely due to the cost of handsets and connection charges. This further highlights the importance of ensuring that spectrum fees for new technologies do not act as a barrier to uptake.

Mobile subscriptions in India by technology (millions)

Identification of spectrum and clearance
India has, to date, awarded spectrum in the 850, 900, 1800, 2100, 2300 and 2600 MHz bands, for a variety of technologies. Details of the awards of these holdings are shown in Figure 4.5. However, it must be noted that India’s spectrum awards are typically carried out on a regional basis, and so this does not represent an operator’s ability to deploy nationwide networks.

Spectrum awards in India

The March 2021 spectrum auction in the 800, 1800 and 2300 MHz bands increased the spectrum holdings of Jio, Airtel and Vodafone, which positively affected the speeds available for customers. Median download speeds increased from 8.52 Mbps in (Q1 2021) to 10.44 Mbps in Q2 2021. However, more spectrum, specific for 5G use will be instrumental in further growth of the sector and enhancement of consumer experience. As described in Step 4 below, while further spectrum was made available in the March 2021 auction, it did not sell due to overly high reserve prices.

The regulator, TRAI, has identified spectrum for 5G services in its White Paper.

  • The 700 MHz band is available and an auction has already taken place, although this spectrum did not sell at the time.
  • The 3500 MHz band is currently used in part by the Indian Regional Navigation Satellite System (IRNSS). However, this use is limited to a few geographic locations, and so the TRAI proposes to award the entire band from 3300 MHz to 3600 MHz with small geographic restrictions around satellite use. The whole band will be awarded on a TDD basis.

There will therefore be limited need for clearance of this initial spectrum. However, care will need to be taken over existing C-band use of fixed satellite services. All other incumbent users of the 3500 MHz range were required to vacate this band before 2019.

However, as noted, a previous auction for 700 MHz spectrum resulted in no sale, and an auction for spectrum in the 3500 MHz band has been postponed (from an initial date in 2017) due to a lack of ecosystem readiness and maturity. In both cases, high reserve prices have been cited as a barrier to efficient allocation of spectrum. This will be discussed further below.

Technology definitions and restrictions
While the 5G spectrum has not yet been auctioned in India, the operators in the Indian market have been carrying out preparatory work to support the 5G commercialisation after the spectrum is assigned. The Department of Telecommunications gave a green light for operators to commence 5G trials in India in May 2021. Noncommercial 5G trials were to be conducted over a period of 6 months with allocated spectrum in the mid-band (3.2 GHz-3.67 GHz), mmWave band (24.25 GHz-28.5 GHz) and the sub-1 GHz band (700 MHz), as well as in the operators’ existing spectrum. The focus was on developing India-specific use cases.103 Participants in these trials were required104 to conduct trials in rural, semi-urban and urban areas and encouraged to use locally developed 5G technology. Three operators are conducting 5G trials and have reportedly achieved very high 5G speeds. Airtel is rolling out 5G-ready network equipment and Jio is testing its own 5G open RAN solutions in multiple Indian cities.

For the trials, both Airtel and Vodafone Idea are trialling the 5G Non-Standalone (NSA) solution and Jio is testing the 5G Standalone (SA) option. Airtel has also conducted a 5G trial in the 1800 MHz band. Reportedly, it has also tied up with Tata Consultancy Services (TCS) to develop an indigenous 5G solution.

One of the important aspects of the 5G deployment in India is the 5Gi standard developed by the Indian Institute of Technology (IITs) with support from the Telecommunications Standards Development Society of India (TSDSI). The main feature of 5Gi is the Low Mobility Large cell (LMLC) which can enhance the signal transmission range of a base station. This would enable the operators to increase their coverage which could help in costeffectively expanding 5G coverage, especially in rural areas and assist in decreasing the digital divide. 5Gi will operate on the same bands and spectrum as the regular 5G network

The Indian government has expressed support for the 5Gi standard, but the industry opinion on 5Gi in India is mixed. Vodafone Idea and Airtel have expressed concerns around the interoperability and increase in network cost, while Jio is open to the idea of deploying 5Gi. The vendors have also shown some concerns regarding developing 5Gi specific equipment because of the lack of wider acceptability and potentially low return on investment. Other challenges noted with 5Gi are lack of global harmonisation and scale benefits.

The international industry has also shown some reservations related to the 5Gi standard from the perspective of its impact on the supply chain security. While the developers of the standard claim that it would only require for the operators to make small changes in the RAN software to deploy 5Gi and it would not affect the cost of the operators, operators themselves argue against this, with some equipment manufacturers stating that 5Gi demands major hardware change. In addition, the millions of 5G-enabled devices already in the market will only recognise the 3GPP-mandated global 5G standard – and this is additionally important when considering roaming. While there are disadvantages to the use of 5Gi, there are also advantages – including an enhanced rural deployment and experience. It is important therefore that operators are able to choose whether to utilise this technology, based on the needs of their consumers, rather than it being mandated.

In December 2021, a plan of action was agreed between 3GPP and TSDSI to allow the merger of 5Gi into 5G as part of Release 17, paving the way for a single common 5G specification going forward.

Spectrum valuation and award design
The 5G auction is expected in 2022. In November 2021 the Telecom Regulatory Authority of India (TRAI) published a consultation on the auction of spectrum for 5G. The consultation covers a series of frequency bands including 700, 800, 900, 1800, 2100, 2300, 2500, 3500 MHz and 26/28 GHz bands, and the details of the auction are expected to be finalised in March 2022.

One key concern over the award of spectrum in India is the regulator’s current tendency to set high reserve prices. Previously, TRAI had recommended a reserve price of ₨ 4.92 billion (approximately USD 67 million) per MHz for the 3500 MHz band, which the industry protested was very high. Similarly, the 700 MHz spectrum band has remained unsold after two attempts, despite the reserve price being reduced by 43% between the two auctions.

The government has been urged to revise its spectrum valuation methods, following the clear evidence that it has overestimated the price that operators are willing or able to pay. A standing committee report from February 2021, has noted that the TRAI’s recommended reserve price for the 3.5 GHz range in the upcoming 5G auction is 3-70 times the market determined price in other countries in absolute terms and 16 times in relative terms (after adjusting for factors like population, GDP per capita and ARPU). The report emphasised that there was a need to strike a balance between the Government’s expectation to generate revenue (especially in the backdrop of the pandemic) and growth of the telecoms sector.

However, to date there has been no announced change in the TRAI’s approach to reserve prices, although in its November 2021 consultation paper the TRAI sought comments from industry on the appropriate valuation approaches for the different bands to be auctioned and how the reserve price should be set. Some consideration has been shown over extending licence durations, but this will only partially mitigate the impact of high prices due to the inherent uncertainty of spectrum use in the long-term.

The TRAI and government have, however, announced a number of financial support measures for operators. In the second week of September 2021, the government approved a set of financial relief measures for the telecom sector. In 2019, the Supreme Court had ordered telecom companies to pay dues worth over ₨1.4 trillion (approximately USD 19 billion) to the government.

This put intense financial stress on the operators which were already struggling due to an intense price war. Following this, the government set out a relief package for operators: the telecom companies have been given a four-year moratorium on spectrum and AGR dues, and they can now opt to pay these duties and interest accumulated at the end of the four- year period. If the company is unable to pay the dues at the end of this period, it will be able to negotiate with the Government to pay it an equity stake in lieu of the accumulated dues.

More recently India has adopted a major relief package for MNOs with spectrum-related reforms. Adopted measures include the following: annual spectrum usage charges are revoked for future auction winners; licence durations are to be increased from 20 to 30 years; and there will be no more bank guarantee required.

These reforms are likely to ease some financial pressures and restrictions on operators, but they do not address the key issue of the TRAI’s valuation exercises giving overly high estimates. Plum has previously examined the econometric and other methods used to estimate spectrum value and noted a number of issues with the methodology; a number of other exercises have drawn similar conclusions. It is crucial that a full study of spectrum value and reserve prices is carried out before future awards, and the industry has already asked the TRAI to do this.

Future developments
The delay in the 5G auction has a high socio-economic cost for the country and any further delay could significantly harm the sector’s growth, consumer welfare and development, and recovery of the economy from the Covid-19 pandemic. It is imperative that certainty can be given to operators over 5G spectrum awards as soon as possible.

However, this delay might have some inadvertent benefits. These are the reduction in the network equipment costs as the 5G ecosystem matures, and wider availability of the 5G devices resulting in affordable devices. These factors could both drive down the costs of operators in launching 5G services, supported by potential high demand for 5G underpinned by high penetration of 5G devices. It is unclear whether these benefits will outweigh the costs from delayed deployment, however, particularly given the increasing energy costs caused by rising coal costs which form a significant part in India’s electricity generation, which are in turn increasing the cost of rolling out new networks.

Comparing 5G non-standalone and 5G standalone options, the local industry specialists note that the operators in the Indian market might prefer to go with the non-standalone option to begin with before transitioning to standalone. In particular, there is currently no evidence of significant business demand for use cases which are facilitated by standalone networks. It is expected that the initial 5G uses case in India are likely to be (eMBB) and fixed wireless access (FWA) before the move to vertical based use cases120. Given this, it is important that there is sufficient spectrum maintained for LTE use, and spectrum should be made technology-neutral.

The Indian government’s focus is on including Indian players providing the software and hardware for the 5G deployment or international players to be manufacturing equipment locally in India. It is reported that Ericsson, Nokia, Samsung, and Qualcomm are producing hardware in India121. Airtel and Tata have reportedly developed an indigenous 5G solution using OpenRadio Access Network, and Jio has announced an indigenous 5G solution by partnering with Qualcomm to produce 5G equipment. Other, domestic players like Tech Mahindra, Sterlite Technologies Ltd, state-run ITI Ltd and might be entering the 5G equipment market as well. Recently Tata has announced that its subsidiary Panatone Finvest has offered to acquire a controlling stake in Tejas Networks (a telecommunications equipment maker); this could further increase competition. GSMA

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