5G drive significant advancement; spectrum base price an issue: Analysts

The much-awaited 5G spectrum auction will bring significant advancements for the industry and consumers, market watchers said, while some felt that the base price for spectrum remains an issue for bid

The much-awaited 5G spectrum auction will bring significant advancements for the industry and consumers, market watchers said on Wednesday, while some felt that the base price for spectrum remains an issue for bidders, who were expecting much lower rates.

The 5G auction and steps outlined for bidding will open up newer avenues for deeper penetration, access and rich user experience, Peeyush Vaish, Partner and Telecom Sector Leader, Deloitte India, said.

He noted that the government has also announced an auction of the millimetre-wave (mm-wave) band, which will not only help in unlocking the true potential of 5G but will also help strategically manage costs for the operators.

"The roads are now clear for the 5G auctions. This is probably one of the most awaited spectrum auctions, which will bring significant advancements for the industry and the consumers," Vaish said, adding the good part is that spectrum across bands will go under the hammer shortly.

Another aspect which will spur "a good auction" is that operators will have the flexibility to surrender the spectrum after 10 years without any liabilities.

"To boost technological advancement, the government has also announced the development of private networks, which will pave the way for Industry 4.0 applications. Together, these steps will open up newer avenues for deeper penetration and access, rich user experience via consolidation as well," he said.

Jaideep Ghosh, Chief Operating Officer of Shardul Amarchand Mangaldas & Co, said the wide availability of spectrum across all bands is encouraging as potential bidders can opt for spectrum bands and quantum as per their strategy.

"Having said that, the base prices for spectrum remain an issue for the bidders who were expecting a much lower price," Ghosh added.

The analyst comments came after the Union Cabinet approved the auction of airwaves capable of offering fifth-generation or 5G telecom services, including ultra-high-speed internet, and gave its nod to set up of captive 5G networks by the big tech firms.

The auction of over 72 GHz of the spectrum will be held by July end, said an official statement, detailing the decision taken by the Union Cabinet headed by Prime Minister Narendra Modi, at its meeting held on June 14.

The spectrum auction will commence on July 26, 2022.

The cabinet has approved 5G auctions at reserve prices recommended by the sector regulator Telecom Regulatory Authority of India (Trai).

Trai, in April this year, recommended about a 39 per cent reduction in the reserve or floor price for the sale of 5G spectrum for mobile services, although the industry at that time had termed the cost as being "too high".