As widely anticipated by the sector experts, the premium 700MHz band remained unsold yet again, owing to its high reserve price in the spectrum auction 2021 that concluded on Tuesday.
This comes despite the 700MHz band being widely used for a cost effective deployment of 5G in Europe and a 40 percent cut in its base price from Rs 11,485 crore to Rs 6,568 crore.
Telecom companies in India are pinning hopes for 5G to be rolled out in 2021 with companies like Reliance Jio and Bharti Airtel doing tests to prepare 5G for launch yet a cut in its price could not entice the companies to invest in the expensive band.
In the previous airwave auction of 2016 too, the 700MHz band had found no takers.
Moneycontrol explains the many benefits of the 700MHz airwave, its role in 5G, why does it command a high price and the government's indication to put it on sale for the upcoming 5G auctions
What is 700MHz and what are its advantages?
The 700 MHz band is a set of frequencies between 698 and 806 MHz is a highly sought after around the world in rolling out the 4G technology for mobile licenses.
The 700MHz has gained massive acceptance among the telcos owing to its many inherent advantages like wide coverage, low frequency and a good in building penetration.
It is five times more efficient when compared to 1800 MHz for the rural area coverage and twice as efficient as the 900 MHz. Given the high proportion of the Indian population residing in villages and an increasing adoption of the mobile technology, the importance of the 700MHz band for the telcos becomes even more significant.
Further, the 700MHz band is said to be cost effective for the telcos. It is significantly cheaper to provide broadband services in 700MHz than in the 2100 MHz band which is almost 70 percent expensive.
What is the role of 700MHz in 5G?
The 700MHz band is being widely used by the telcos in the West for a cost efficient deployment of the 5G technology.
All the big telcos in India namely - Bharti Airtel, Reliance Jio and Vodafone Idea have been urging the government to spell out a clear roadmap for the spectrum auctions for 5G airwaves.
IT & Telecom Minister, Ravi Shankar Prasad in June 2019 had announced that 5G spectrum auctions would be conducted in the same calendar year and had also announced a 100 day deadline to begin 5 trials.
In the spectrum auction 2021, the DoT auctioned over 2,308 units of spectrum across the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands however the spectrum in the in the 3,300-3,600MHz bands which have been earmarked by TRAI for 5G roll were not put on sale.
Telecom analysts have said that the 700MHz band will play a critical role in entering the 5G race before the official 5G spectrum auctions speculated to be conducted in later 2021 or early 2022.
Why does the 700MHz command a high price?
The 700MHz is considered to be an expensive band, owing to its multifaceted benefits ranging from greater penetration, wide coverage and cost effectiveness in providing broadband services. And the latest being its ability in providing cost efficient 5G technology.
In the spectrum auctions that concluded on Tuesday, the unsold bands - 700MHz and 2500MHz together accounted for 40 percent of the total spectrum put on sale.
Further, the value of the unsold 700MHz alone accounted for 59 percent of the total airwaves they were put on sale at nearly Rs. 2.3 lakh crore.
Will the 700MHz find a slot in the upcoming 5G auction?
Out of 7 bands put to auction, the 700 MHz and 2500 MHz bands did not receive bids from any of the country’s three leading operators - Reliance Jio, Bharti Airtel & Vodafone Idea.
The telecom secretary on Tuesday indicated that the 700MHz band, which remained unsold, could be used for 5G auction. He further indicated that the unsold spectrum in the 700 and 2,500 MHz will be sent to the Telecom Regulatory Authority of India for a fresh reference.
Commenting on the lack of bidding for the 700MHz band, the secretary said, "The fact that in 700 MHz no bid has come is something we will see. But there is also a distinct possibility that now with 5G technology that's going to come sooner or later. In 700 MHz, the 5G ecosystem is also developing as it is developing in the mid band 3.3-3.6 GHz. If 700 MHz is not sold in this auction, nothing prevents it from being sold in the next auction."
Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
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