The fight for 5G spectrum between telcos and tech companies is getting bitter by the day.
Just days after the Cabinet allowed direct spectrum allocation to enterprises for captive private networks, considered a win for tech companies, India’s top telcos have shot off a letter to the Department of Telecommunications (DoT) asking it not to allow direct 5G spectrum allotments to systems integrators and intermediaries, in a clear bid to thwart big tech companies from easy access to the airwaves.
In the letter, also marked to the Prime Minister’s Office, Niti Aayog and the Department of Economic Affairs, operators have also called on the department to ensure that captive private networks are set up strictly by “end users” (read: enterprises or corporates) and not “third parties,” failing which the latter would gain a backdoor entry into telecom services. Tech companies typically function as systems integrators.
Third parties intending to provide, install and operate captive private networks should be mandated to obtain airwaves through the same process as telcos—meaning via auctions—the Cellular Operators Association of India (COAI) said in a strongly-worded letter, dated June 18, to telecom secretary K Rajaraman.
ET has seen a copy of the letter, which was the first official reaction of telcos to the auction details unveiled by the government last week. The COAI represents India’s top three carriers—Reliance Jio,
, and (Vi).
The operators said it’s very important for them to have clarity on the scope and conditions for allocation of spectrum for captive private networks for operators to ensure meaningful participation in the 5G airwaves sale next month.
At stake is 40% of potential revenue that telcos had forecast as coming from the enterprise business in the 5G era, basis which carriers would have been planning their spectrum buys in the upcoming auction starting July end. Carriers fear that access to spectrum without auctions would allow tech companies to offer similar 5G services to enterprises that operators would be offering, but at a much lesser cost.
“As such (5G captive network) solutions can be provided by licensed TSPs (operators) having spectrum acquired through auction in a transparent manner, the solution provider (any other party who sets up a private captive network) should pay licence fee and GST at the rates applicable for TSPs on the billed amount of revenue to ensure level playing field,” telcos said.
They also want captive private networks to only be assigned spectrum in non-IMT (read: non-5G) bands, and system integrators and other intermediaries should also not be allocated any (5G) spectrum, failing which expansion of 5G mobile services would be constrained, COAI said.
The telco lobby body said taking away chunks of crucial spectrum to dedicate them to verticals runs a serious risk of fragmenting available spectrum—reducing their carrying capacity—and threatens the wider success of 5G and poses threat to national security.
It added that if other bands likely to be identified for 5G service are not reserved for telcos, it would constrain operators from properly planning their networks to meet customer demand in mid and long term.
The Notice Inviting Applications—the main document containing all auction rules—issued earlier this week, said “enterprises setting up captive non-public networks (CNPNs) may obtain spectrum directly from DoT and establish their own isolated network”.
This effectively means non-licensed companies may be able to directly acquire 5G spectrum from the government without having to buy it in an auction. But since the government has also said that DoT will seek Trai’s views in terms of such direct assignments, these direct airwave allotments to independent enterprises won’t happen immediately but possibly over a year-or-two, say industry executives.
The COAI has also outlined some safeguards that need to be in place to reduce risks posed by captive private networks and ensure investor confidence.
It has called on DoT to restrict the scope of captive private networks to “only machine-to-machine (M2M) communications within the premises” and to plant automation only. It has also suggested that captive network operators ensure zero interference with telco networks, and that a failure to do this, on a complaint by any entity, must result in shutting down the captive network till resolution of the issue.
Further, the COAI asserted that the recent decision to allow direct spectrum allotments to independent companies for setting up captive private 5G networks appeared to have been taken based on certain misquoted international practices, particularly in Germany.
It cited a Compass Lexicon study on the negative economic impact of setting aside commercial spectrum for local private networks in Germany. “The set-aside of 100 units in Germany could cause consumers welfare losses of around €6.2-15.6 while consumers may also suffer from a significant degradation in quality of services,” the COAI said.
The Compass Lexicon study also noted that public network operators paid €2.2 billion extra in the German spectrum auctions, money that could have been used for faster and more extensive deployments of 5G services.