India's biggest telecom auction for 5G spectrum has kicked off today, with India's three established mobile communication players - Reliance Jio, Bharati Airtel and Vodafone Idea - being joined by new entrant Adani Data Networks.
At its base price, the spectrum is worth ₹4.3 lakh crores (₹4.3 trillion). The auction would last all day but could spill into tomorrow if the demand for the spectrum exists and bidding continues.
Each of these players paid an earnest money deposit: Jio's was the highest at ₹14,000 crores, followed by Airtel at ₹5,500 crores, cash-strapped Vodafone Idea at ₹2,200 crores and Adani Data Networks at ₹100 crores. The earnest money deposits indicate the level of spectrum that these players intend on buying.
The entry of the Adani Group into the fray sparked a new round of concern that it would be the lynchpin of the next round of consolidation in the telecom space, as Jio had done with its entry into the space in 2016. However, the Adani Group clarified that it was purchasing spectrum for its own enterprise use to scale its conglomerate, and was not looking at entering the "consumer mobility space".
The auction would take place across several spectrum bands, according to a Department of Telecom notification:
- The low bands would be 600MHz, 700 MHz, 800MHz, 900MHz, 1800 MHz, 2100 MHz, 2300 MHz
- Mid bands of 3300 MHz
- High bands of 26 GHz
Airtel and Jio are expected to bid across all three bands with Vodafone being prudent and focusing only on mid-ban spectrum. Adani is expected to bid for high-band spectrum.
What are spectrum bands and why is it important?
Nokia, a global manufacturer of telecom equipment, explains that the electromagnetic spectrum is a finite resource having several communication and radio uses. These uses span communication, GPS and satellite use cases.
Sprectrum is based on several frequency bands, with the range going from low bands to high bands having a tradeoff among them between the coverage afforded by these bands and the quality of the speed of the broadband that it can carry.
Low bands have the widest coverage and can best penetrate buildings, characteristics making it ideal for rural coverage. However, it has limited broadband uses. It is used in the United States, Canada and in several European countries. Mid-bands have comparable coverage to 4G, with better broadband quality. High band spectrum has extremely high data rates, but they travel shorter distances and are not able to penetrate buildings that easily. It is best suited for high-traffic networks such as urban areas, population-heavy points and airports. It is used in countries like Finland, Japan, South Korea and Italy.
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