Digital solution providers looking to enter India's 5G spectrum play

Digital solution providers to enterprises are evaluating whether to bid for 5G spectrum, a move which could bring in more players to add to the only three mobile telecom providers in the game: Reliance Jio, Airtel and Vodafone Idea.  

At least one of them, Tata Communications, has been a strong votary of allowing internet service providers (ISPs) – it has a licence - to be allowed to bid for 5G spectrum so that they can offer 5G broadband services to their enterprise customers and compete with telcos.

When asked if it was considering bidding for 5G spectrum, a Tata Communications spokesperson declined to comment.

Along with Tata, other digital solution providers such as Amazon AWS, Google, and hyper-scale data centre companies, offer a slew of services such as cloud computing, high reliable internet services, and security solutions. Under the current rules, ISPs can bid, of course, but they have to pay for, and obtain, a UASL licence. This can be a stumbling block.    

According to sources helping enterprise solution providers, they are looking at the viability of going in for limited circles which have a concentration of companies. These include Delhi and Mumbai, Karnataka, Andhra Pradesh, Maharashtra and perhaps Gujarat.

These sources point out that it would be enough for enterprise solution providers to bid for limited spectrum which caters for B2B services, that is, around 30-50 MHz in the 3.5 GHz band and 100 MHz in the millimetre band.

An executive with a leading telco which is all set to bid for spectrum said it was aware that some enterprise solution companies would be thinking of bidding for 5G spectrum.

“They have been very active participants in the 5G consultations with TRAI. But it does worry us. We are also prepared for such companies to tie up with one of the telcos to provide B2C services as now both spectrum sharing and leasing are permitted,” said the executive.

However, he does not see the limited competition, if it happens, leading to a substantial hike in the price of 5G spectrum beyond the base price at all. The reason is that there is already enough spectrum available and the requirement for enterprise solution providers is small.

That’s why experts also feel Vodafone Idea will not bid aggressively, if at all. Tata Communications had earlier responded to TRAI’s consultation paper on 5G spectrum pricing. When asked whether the existing eligibility conditions for 5G auction needed to be changed, the company had clearly said that ‘the eligibility criteria of previous auctions should be amended suitably to include ISPs as potential bidders for the 5G spectrum auction’.    

Tata Communications has said ISPs should be allowed to participate in the 5G auction as they were eligible to bid for BWA (4G) spectrum in the 2010 auction.

Further, it said ISPs are focused on serving enterprise customers and, as such, have to roll out fixed wireless access to meet enterprise demand for high capacity and low latencies.

The company has also argued that the proliferation of internet and broadband services in the country cannot happen with only three players in the market.

Many enterprise solution providers were hoping that the government would allow ‘private networks’ to get their own spectrum and run their networks without depending on telco collaboration.

But the Department of Telecommunications has shelved the TRAI suggestion and even the latter has asked for more assessment of demand. Enterprise solution providers have also pushed for spectrum to be given to them at an administered price.

With this option off the table for the time being, the question is whether enterprise solution providers will now take the plunge and buy 5G spectrum on their own to serve their customers.

In the race
 

• Digital solution providers are looking to compete for enterprise business

• They are eyeing 30-50 MHz in the 3.5 GHz band and 100 Mhz in the millimetre band

• Delhi, Mumbai, Karnataka, Andhra Pradesh, Maharashtra, and Gujarat are their preferred circles

• These firms have to secure a unified access service licence to bid for spectrum

• Telcos say there is enough spectrum, so additional players won't push up the price a lot