As just-concluded 5G spectrum auctions are as an all-round success. The provisional sale of airwaves not only fetch over Rs 1.5 lakh crore for the government, but it also allow telecom operators to gain 5G spectrum without bidding much higher than the reserve prices.
The auction now sets the stage for the nationwide rollout of 5G services in the world’s second-largest mobile market.
Reliance Jio’s Rs 88,078 crore (nearly $11 billion) bid to acquire 24,740 MHz of 5G spectrum might seem like a costly affair on the surface, telecom analysts reckon it is a bet meant for the future.
And the Mukesh Ambani-own firm’s strategy to bid for the most sought-after (and expensive) 700 Mhz band was a smart and carefully execute one.
Jio pass its nearest rivals Bharti Airtel, Vodafone-Idea, and the new entrant Adani Data Networks, amidst high demand for 700 Mhz.
Jio’s win will leave other telcos “desperate“, say analysts.
And even if Airtel gets hold of 700 Mhz in the next round of auctions, it will likely have to pay a much higher premium.
Jio is expect to reap the benefits of, what telecom analysts call, a “comprehensive spectrum portfolio”.
It includes a readily deployable sub-Ghz band (less than 1 Ghz, in this case 700 Mhz) option, a high band capacity-layer option in the form of C-Band (3.3 Ghz), and also spectrum in the mm-Wave band.
Why 700 Mhz Important Band?
The 700 Mhz band had gone unsold in the telecom auctions of 2016 and 2021.
So, in 2022, it became a hot property for telcos.
Sub-Ghz bands (usually in the range of 700-Mhz and 900 Mhz) are said to be ideal for wireless applications.
These cover long distances (upto 7-10 kms) and consume low power.
The 700 Mhz band also offers better indoor penetration in dense urban geographies like the Delhi, Mumbai, Kolkata, Pune circles.
It can achieve more than 300 Mbps of download speed in trial conditions, as per Qualcomm.
The band is already deploy by telcos for 4G services across most of India’s 22 telecom circles.
In contrast, the highest band on offer, which is the 26 GHz frequency (acquire by Adani Data Networks), might offer higher speeds of over 1 Gbps, but is constrain to a coverage area of just a few kilometers.
Its coverage can even be disrupt by trees and buildings, and is not ideal for a country like India.
So, the 26 GHz band is primarily use in limited-radius industrial zones.
For the Adani Group, the use case is likely to be in their own business hubs, airports, and other industrial zones.
The Gautam Adani-own firm said in a statement :
Benefits of mix of bands
What are the benefits of acquiring a mix of bands instead of just one high or low frequency one.
Besides the aforementioned advantages of the coveted 700 Mhz band, a C-band can bring in added benefits too.
The high-frequency band is use in areas where signals can become degrade due to heavy rain or other intense climate-related conditions.
The band is mainly use in Asia, Africa and Latin America.
And lastly, the mm-wave band is expect to provide a significant capacity layer to Jio in high-traffic hotspots, including railway stations, stadiums, other public venues, etc.
The three bands put together are said to achieve a higher throughput, which in turn will improve customer experience across urban and rural geographies in India.
In terms of cost efficiencies too, having a readily deployable sub-Ghz band (in addition to C-band), is said to reduce coverage site requirements in rural areas, and bring down capex of telcos by almost 40%-50%, as per analysts.
How Costly will 5G be for Users?
5G tariffs may be at par with 4G rates for individual consumers.
So, 5G is expect to shore up ARPUs for telcos by at least Rs 50 to the Rs 225-250 range in the next 12-24 months.
In most developing markets, including nearby Bangladesh, about 1.5%-2% of GDP per capita is spent on telecom, which includes product (handset) and services.
In India that spend is much lower because tariffs have among the cheapest in the world.
With the advent of 5G that stands to change in the next 3-4 years.