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Vodafone Has A 5G Warning For Government

Vodafone Idea is worried that the 50% combined spectrum holding limit for sub-1GHz spectrum bands, which can be used for 5G in future, may allow just two carriers to corner the airwaves — a scenario that will undermine healthy competition in the industry.

“While the pricing for the future spectrum is very important, access to spectrum is equally important,” P Balaji, chief regulatory officer at Vodafone Idea Ltd, told ET. “If 5G is the game of the future from 2020 onwards, then it is very important that all telcos should get access to 5G, and not just opportunity to buy 5G airwaves.”

Balaji said the industry has four clear operators — Vodafone Idea, Bharti Airtel, Reliance Jio and state-run Bharat Sanchar Nigam Ltd — which make for a great industry structure.

“The access will allow for a vibrant competitive framework of providing 5G services, just like 2G, 3G, and 4G that are competitive, where the consumer gets a choice while the government’s objective is met,” he said.

Vodafone Idea, the market leader, is so far the only telco to call for a change to spectrum holding rules, while all the service providers have called for the 5G base prices to be lower than what the regulator has recommended.

The government had last year increased the overall airwaves holding limit to 35% from 25%, and imposed a 50% cap on combined spectrum holdings in the 700 MHz, 800 MHz and 900 MHz bands – all under 1 GHz –with the first two bands expected to be refarmed for 5G use in the future.

5G spectrum auctions in India are expected either late this year or early next.

“5G is like gold dust from a 10-year perspective,” said an industry official who requested not to be identified. “You need to have an adequate choice for consumers and enterprises…Therefore, 35% cap should be enforced for all the bands including the sub-GHz bands… This is the easiest way to ensure that there’s no monopoly or duopoly in 5G.”

A 35% cap for all bands will ensure “there are enough incentives for price discovery through auction”, the official said. This level of holding for 5G bands will be large enough to create significant capacity for service delivery, the person said.

Of the three private operators, Vodafone Idea — with a quarterly loss of over Rs 5000 crore, debt of over Rs 1.14 lakh crore and net debt to Ebitda of over 25 times — is under more financial pressure than rivals Bharti Airtel, whose Indian operations are also making losses, and Reliance Jio Infocomm, which is the only telco posting profits.

Balaji also reiterated Vodafone Idea’s stance that mid to end of 2020 will be the right time to auction new spectrum as the 5G ecosystem will be more mature and the industry will have business cases and use cases in place. “The networks are already getting ready to become 5G ready,” he said.―Gadgets Now

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