Telecom companies are preparing to grab the position of the top rank bidder in each local service area in the upcoming auctions in order to be assigned the best unencumbered spectrum in the 3.5 GHz 5G band which will give them a substantial advantage over their rivals.
The top rank is decided by a complex process which is essentially based on the role a telco plays in pushing up the bid price in each clock round.
So, in simple terms, if a telco ups the price, for example, from an earlier round from Rs 250 to Rs 270 and others do not, then that telco is number one. If there is a tie between two then the record in how many clock rounds each was higher is taken into consideration and so on and so forth.
As per the Notice Inviting Applications (NIA), if only 300 Mhz or less in the 3300-3630 frequency band is sold, the assignment of spectrum to the successful bidders will start from 3600, moving backwards to 3300 starting with the first rank bidder followed by others. Assuming each of the three telcos has bid for 100 MHz of spectrum, the rank number one bidder will be assigned between 3500-3600 MHz. The band does not have any other users which restricts its use and it also has a range of equipment and radios available in this band globally
But the bidder with the second rank has a problem, which has been highlighted earlier by Bharti Airtel in its communication to the regulator. Spectrum between 3.4 GHz to 3.425 (25 MHz) is used for the NavIC system, an Indian constellation of eight satellites run by ISRO which provides navigation and timing services.
The Department of Space has indicated that there should be a buffer zone ranging from 350-1400 kilometres for any micro site deployed adjacent to the system.
Bharti Airtel, based on an assumption of needing to keep a 130 km buffer zone, has said that because of this restriction, telecom service providers using this band will not be able to cover over 70 million of the country’s population, 600 towns in the buffer zone and over 60,000 villages.
Clearly, this puts them in a big disadvantage over the rank one bidder. For the third rank bidder,the challenge is even more serious. The defence and navy use the 3300-3400 frequency band across the coastal areas. Considering India’s vast coastline, the telco will face the problem of not being able to use the entire 100 MHz of the spectrum as it has to create again a 100 km buffer zone for non-interference.
Airtel had suggested that the navy and defence should fully vacate this spectrum before it is auctioned.
NAI has also incorporated the unlikely possibility of more than 300 MHz of spectrum being sold (considering that Vodafone Idea is not expected to be a big bidder) in the 5G spectrum. As the cap on spectrum has been fixed at 40 per cent, a telecom service provider can bid for and buy up to 130 MHz of spectrum, making the total 330 Mhz.
In that case, the method of assignment by the DoT will be different: the number one bidder will then be assigned spectrum from 3630 MHz and going backwards again till 3300 for the second and third bidders.
Telcos say that currently the eco system for equipment in this band (between 3600-3630 MHz) is not available globally and it will take at least three to four quarters for its commercial deployment.
That is why the government has earmarked 40 MHz to BSNL and MTNL between 3630-3670 band for 5G as they will take a few years to commercially deploy 5G.
Even the number one in rank, while it will have enough spectrum to launch its services, has to wait a while before it can use the additional spectrum which it has bought beyond 100 Mhz. Business Standard