The companies that have applied for spectrum to build their private captive networks will have to shell out around Rs 1,500 crore to buy it from the government, sources said. This is because direct allocation of spectrum to enterprises for their private networks will be done at the auction-determined prices.
Final decision to this effect will be taken once the government consults the Telecom Regulatory Authority of India.
Infosys, Tata Communications, Larsen & Toubro, Tejas Networks and Capgemini are among 20 enterprises that have applied to the department of telecommunications (DoT) for direct allocation of spectrum for building private networks.
For private networks, spectrum in the 24.25-28.5 GHz band is required where the per MHz auction price was `6.99 crore. The quantum of spectrum required would vary on the number of locations, which are spread across circles, the companies concerned would like to connect through such networks, but around 100-400 MHz would definitely be needed, industry analysts said.
Since the enterprises would be allocated spectrum at a fixed price, they would be barred from using the same for retail purposes — building networks for other firms. However, like Adani Group, had they participated in the auctions, they would have been free to use the same for retail purposes.
“The choice for enterprises is clear: Either take spectrum at the auction-determined price today and use it only for captive purposes or participate in the next round of auctions next year to buy it and be free from such restrictions,” sources in the government said.
There’s a third option also available to the enterprises if they want to build such networks for third parties – buy airwaves from the telecom operators. However, analysts rule out this possibility at this stage as it would not make commercial sense.
Before the auctions, which were held in July, the government had decided that direct allocation to enterprises would be decided after conducting a demand study – how many companies evince interest – based on which the allocation methodology would be decided.
Under private networks, corporates can set up their own Wi-Fi, data network instead of taking the services from any telecom service provider as is the norm today. Such networks would help industries such as healthcare and automobile experience high data speed and data carrying capacity within their premises, which may not be possible if they use public networks.
“We have participated in the demand study (for private 5G) and to get started our requirement is for 100 MHz in the mid-band because of the much more evolved ecosystem and availability of equipment. Once the ecosystem is evolved, spectrum in the millimetre wave band will also be in demand,” said Sandeep Nag, director 5G at Capgemini.
Capgemini has been testing its solutions using the trial 5G spectrum in the low, mid and millimetre wave bands for three years now. Nag expects the government to come up with framework and pricing related to private 5G spectrum by the middle of next year.
However, telecom operators have been opposing direct allocation of spectrum to enterprises for private networks. According to Cellular Operators Association of India (COAI), allowing these companies to own the spectrum for private 5G will distort the level-playing field. According to COAI, such allocation would result in creation of middlemen or intermediaries who would install and operate the network for enterprises without obtaining spectrum through auctions.
“Administrative allocation of spectrum will give these intermediaries an advantage over a telecom operator in terms of cost of offering services for private 5G, which in a way will create a huge competition for telcos in the enterprise businesses,” SP Kochhar, director general of COAI, told FE.