On July 27, on day one of the 5G spectrum auction, there was a surprise.
The 700MHz (megahertz) band, which no one had bid for in the previous two spectrum auctions in 2016 and 2021, suddenly rose to become the belle of the ball. Actually, the third runner-up, but still.
In this auction, 40% of this band was bid for Rs 39,300 crore.
What changed? For one, the reserve price was cut sharply, by 40%, when compared to the 2021 prices.
Reserve price? It’s what the Telecom Regulatory Authority of India (Trai), or any seller, asks as the minimum price for what is being auctioned. Since this price was set too high in the last two auctions, bidders ignored more than 60% of the bands on sale.
Then, didn’t all bands see more interest this time? Not the kind of interest 700MHz saw. On day one, the other spectrum in the low band–below 1GHz–attracted much fewer bids. When 40% of 700Mhz was bid for, only 0%, 15% and 17% of 600MhZ, 800MHz and 900MhZ respectively were bid for, according to Nomura. In fact, even in the higher-frequency bands–1.8GHz to 2.5GHz–the interest was less… between 9 and 30%. Only in the premium band, of 3.3GHz and 26 GHz bands, was there greater interest. In this band, 72% was bid for.
What is so special about the 700MHz band? All lower-frequency bands can travel longer distances than higher frequency bands...
Then why not 600MHz or even 800 MHz? “Those aren’t standardised bands for 5G globally,” said Neil Shah, vice president of research at Counterpoint. There are four or five different kinds of 5G spectrum that are generally deployed globally, and 700MHz is one of them. Personal gadgets are usually made to tap into these spectrum bands. If a mobile or laptop manufacturer wants to access a different spectrum band, like 600MHz or 800MHz, then they have to either build new models or customise their existing models, and spend additionally for certification and so on, according to Shah. Why would the manufacturers do that for one or two telecom operators? But there is more to 700MHz than travelling long distances and being common…
Like what? It has to do with the way 5G technologies work too, according to Shah. “Think of the 700Mhz band like a highway, and that it can take a certain number of cars. With 5G technologies, the same breadth of road can be made to carry more cars… for example, stacking cars one on top of another,” he said. In fact, with these 5G technologies, you can get a lower-frequency band like 700MHz to work better than 4G technology running on a higher-frequency band like 1,800MHz, he added. That is, you can get a narrower road to carry more traffic than a much wider road. Also, 5G technologies allow for better integration of bands with different frequencies. Therefore, if a telco has bought bands across frequencies, they can use lower-frequency bands for wider reach and layer it with high-frequency bands for speedy transmission of data, to run higher-end applications. 4G-plus allowed for integration of bands too, said Shah, but 5G architecture works much better for this.In all, 700MHz or 0.7GHz gives wider coverage; can be used across various geographies; and can deliver better data speeds when integrated with higher-frequency bands leveraging the advanced 5G architecture.