You may have heard about the spectrum auctions taking place in India. What is exactly is up for grabs and what are companies bidding on? The simple answer is everything except 5G, which will be auctioned sometime next year.
What are spectrums?
If you go by the official definition, spectrums are invisible radio frequencies that transmit wireless signals to our devices. In other words, they help us make calls on our smartphones, browse the internet and do basically anything on our devices.
These spectrums are then divided and split into several bands, each with its own set of advantages and flaws. They are typically categorised into three different subsects:
Low-band spectrum (up to 3GHz): These are bands that have the farthest reach and the signals using this band travel longer distances with minimal interruptions. The trade-off is that the amount of data they can carry is limited and so is the speed of the data transfer.
High-band spectrum (24GHz and above): The signals within these bands travel shorter distances compared to low-band spectrums but offer more capacity to transmit more data and they do so at higher speeds than the low-band spectrum.
Mid-band spectrum (3GHz - 24GHz): These are the middle men of the spectrum bands, offering a mix of capabilities from both the low-band and the high-band.
Airtel operates on the 1800MHz frequency in India along with Jio and Vodafone Idea. The same three companies also have a presence in the 2300MHz region while BSNL and Vodafone Idea have rights to use the 2500MHz frequencies.
Simply put, circles are a way for the government to better manage the amount of frequencies it has. Currently, India has 22 telecom circles within the country which are then divided into four groups: Metro, A, B and C.
The Metro circle is where you will see the higher frequencies being used. This is because the population in these zones are higher and more densely packed making it easier for telco's to adapt mid-band frequencies in this area. The trade off to distance won't matter much when the population is dense and they get to enjoy faster speeds as a bonus.
The rest of the A, B and C circles are divided according to the population size of these areas. A is the largest in terms of population and C is the smallest. The frequencies are also divided accordingly, with mid-band and higher range frequencies more prominent in A circles and less so in C.
Okay. How do you licence a spectrum?
This is where auctions come in. In India, the government owns all publicly available assets within our boundary. These include the spectrum frequencies. From time to time, the government auctions these frequencies to companies interested in buying them.
Once sold, these companies hold the licence to use that frequency for a set period of time. This is also why you have roaming costs. If a mobile network wishes to use a frequency currently licenced to another network operator, they have to cough up the cost, which in turn trickles down to customers.
The last auction for spectrums took place in 2016 where the Indian government auctioned off frequencies at a reserve price of Rs 5.60 lakh crore. Since most of the deals that were made during that time are set to expire this year, we have another auction on our hands.
This time, the 700, 800, 900, 1800, 2100, 2300 and 2500MHz frequency bands are up for grabs and base reserve price to bid has been set at Rs 3.92 lakh crore.
We now know that Airtel has already spent Rs 18,699 crore on beefing up its frequencies across low and mid-band. This has now given Airtel the chance to serve 90 million customers in India.
As for the rest of the telcos, Jio is the one that is likely to spend the most amount of money in this auction either to renew its frequency deals or buy new bands of frequencies to expand coverage.
Vi (previously Vodafone Idea) has said that it has acquired spectrum in five circles across the country which it says will help expand its coverage and quality of 4G services it offers to customers.Disclaimer: “Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.”