Baba’s Explainer – 5G Auctions

  • IASbaba
  • August 9, 2022
  • 0
Science and Technology
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  • GS-3: Science and Technology- developments and their applications and effects in everyday life
  • GS-2: Government policies and interventions for development in various sectors and issues arising out of their design and implementation. 

Context: India successfully concluded the 5G auction on 1 August with bids worth around 1,50,173 crore. The auction saw India’s major telecom operators participating- Reliance Industries Jio, Bharti Airtel, and Vodafone Idea.

What is 5G?
  • 5G is the fifth generation cellular technology that apart from increasing the downloading and uploading speeds(speed of 1 Gbps) over the mobile network, also reduces the latency i.e. the time taken by a network to respond.
  • It also increases energy efficiency and offers more stable network connections.
  • 5G is also designed to deliver signals more reliably than earlier cellular networks
  • 5G will have a wider area in the frequency spectrum (range of frequencies) that will ensure no network congestion.
  • In addition, it will also ensure connectivity to a full circle i.e. everything is connected to every other thing.
  • 5G will help facilitate the ecosystem for the Internet of Things (IoT) and to incorporate Artificial Intelligence (AI) in our daily lives and
  • To get the benefits of 5G, users will have to buy new phones, while carriers will need to install new transmission equipment to offer the faster service.
  • 5G mainly works in 3 bands, namely low, mid and high-frequency spectrum — all of which have their uses and limitations.
    • While the low band spectrum has shown great promise in terms of coverage but the maximum speed is limited to 100 Mbps. This means that while telcos can use and install it for commercial cellphone users who may not have specific demands for very high speed internet, the low band spectrum may not be optimal for specialised needs of the industry.
    • The mid-band spectrum, on the other hand, offers higher speeds compared to the low band, but has limitations in terms of coverage area and penetration of signals. Telcos and companies, which have taken the lead on 5G, have indicated that this band may be used by industries and specialised factory units for building captive networks that can be moulded into the needs of that particular industry.
    • The high-band spectrum offers the highest speed of all the three bands, but has extremely limited coverage and signal penetration strength. Internet speeds in the high-band spectrum of 5G has been tested to be as high as 20 Gbps (giga bits per second), while, in most cases, the maximum internet data speed in 4G has been recorded at 1 Gbps.
What are the advantages of 5G?
  • High Speeds: Imagine downloading a full HD movie in under 3 seconds. That’s how fast downloads are with 5G. 5G is capable of delivering speeds up to 20Gbps with a 100x increase in traffic capacity and network efficiency.
  • Reduced Latency: Also, with mmWave, you can even achieve latency of just 1ms which helps with immediate connection establishment and that subsequently reduces network traffic.
  • Foundation for latest technologies: It is believed that at its full potential 5G will be able to offer speeds that can render augmented reality in real-time. This will further lead to the development of more hardware that works on augmented reality. This tech is also going to be the foundation for virtual reality, autonomous driving and the internet of things.
  • Ripple Effect: The advantages of 5g will not only make your smartphone experience better but will also open up avenues for advancements in other fields like medical, infrastructure and even manufacturing.

In Summary, we can that 5G entails the following advantages:

  • Improved data transfer speed
  • Reduce latency time
  • Will shape the Fourth Industrial Revolution by enabling Internet of Things
  • Leads to more data-intensive, digital economy.
How much spectrum was bought by the applicants?

About the different bands of spectrum

  • 700 MHz band– It is best suited for coverage in high-density areas and is ideal for data networks and consumer-led services. It can provide a range of 6-10 kilometres.
  • 26 Ghz millimetre band– It is ideal for enterprise level 5G applications including setting up private 5G networks.
  • 800 MHz-2500 GHz spectrum bands– The bidders bought airwaves primarily to increase their coverage of 4G and fill gaps in circles where the 4G network had started to congest.
    • In the latest auction, the 600 MHz band saw no takers.
  • A total of 51.2 GHz of spectrum was sold of the total 72 GHz that was up for grabs – close to 71%.
  • The total spectrum sold was good enough for covering all circles in the country, estimating good coverage of 5G in the next two-three years.
  • At Rs 1.5 lakh crore, the final total bids have exceeded expectations, surpassing the government’s internal estimates of receiving bids of around Rs 1 lakh crore.
  • All the bands were sold at base price, except for the 1,800 MHz band.
  • Reliance Jio emerged as the largest spender in the 5G spectrum auction, acquiring almost half of all the airwaves sold for more than Rs 88,000 crore.
When can consumers in India start using 5G services?
  • Indian consumers can hope to get 5G services in metro areas to start with by October 2022.
  • But operators still have a tough road ahead when it comes to execution. They have an extremely expensive capital expenditure ahead of them for the next few years, even as the pricing dynamics in India are usually slow moving amid resistance to paying premium prices for telecommunication services.
  • Which means that transition to 5G services could be slow moving and restricted to certain urban centres for the next few years.
  • The initial launch of 5G is likely to be restricted to one or two major metros.
Will the service be expensive compared to 4G?
  • Mobile handset must be enabled with 5G capabilities. 5G enabled mobile handsets are usually more expensive and, only 15 to 20 per cent of handsets currently sold in India are 5G ready.
  • Given the massive capital expenditure demands, 5G telecom plans will also be more expensive. The first consumers for 5G will be in urban areas and people who can afford expensive smartphones and premium tariff plans.
  • Given the geopolitical uncertainties as well as the consequent macro and supply chain uncertainties, the road towards all pervasive 5G network is a long one.
  • All indicators suggest that the evolution to a mature 5G ecosystem will be a slow one.
  • Ultimately the Indian consumer should get used to the idea of paying more for telecommunication services.
  • Since Jio’s 4G revolution, India has enjoyed some of the cheapest tariffs across the globe. Leading up to the auctions the industry already took a 20 per cent hike in tariffs.
  • Given that telcos were more aggressive in the auctions than expected, it is predicted that the telecom industry is preparing for another round of tariff hikes. 5G mobile plans and the surrounding ecosystem will also become expensive going ahead.
  • Operators are likely to charge a premium for 5G services.
Which operator is better placed to offer 5G services?
  • Nearly 60 per cent of the spectrum sold by value was bought by Reliance Jio for ₹88,100 crore.
  • Jio is the only operator to acquire spectrum in the all-important 700MHz which was priced so high that no other player could acquire it. This gives Jio a massive advantage over other players because 700 Mhz is considered to be best for indoor coverage. In addition, Jio has amassed the highest amount of 5G spectrum in 3.3GHz and 26GHz.
  • Its nearest rival, Bharti Airtel bought spectrum worth ₹43,100 which will help it to become the only other pan India 5G operator.
    • Jio was strategic with its aggressive spectrum play, with the aim to have the best possible to airwaves to set up its 5G network, as well as deny Bharti Airtel access to high quality airwaves in certain geographies by buying them instead. This will make it harder for Bharti to deploy a quality 5G network.
  • Due to bad financial conditions, Vodafone Idea was subdued in its auction play and bought 5G spectrum only in certain circles.
  • Adani bought limited spectrum in 26MHz- specifically for private network services.

Mains Practice Question – The recent 5G auction is paving the way for telesurgery, internet of things. In this context, what do you think are the roadblocks in realising the full potential of 5G services in India?

Note: Write answers to this question in the comment section.

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