With the completion of the auctions for 5G spectrum, India is well on the way to the next level of the telecommunication revolution. We are about three years behind the developed world but the telecom minister Ashwini Vaishnaw has promised quick allocation. If things go well, the telecom operators – Airtel, Reliance Jio and Vodafone Idea – may roll out commercial services as early as October, this year.
5G or the 5th generation mobile network – currently the highest global wireless standard – has evolved from 1G that gave us an analogue voice, past 2G and 3G that provided digital voice and mobile data, respectively, and then 4G that revolutionized communication through mobile broadband.
5G will now provide the step up with peak data speed that could be 20 times faster than the best we know, low latency – or lightning fast transmission for packets of data; and therefore great user experience ranging from live streaming entertainment to making hassle-free business presentations. It is designed to connect virtually everyone and everything to your phone – machines, home devices and objects – bringing to life the Internet of Things (IoT).
The government received record bids of over Rs 1.5 lakh crore for the over 51,000 MHz of spectrum picked up by the telecom companies, almost double the Rs 77,800 crore offered for 4G spectrum earlier. Mukesh Ambani’s Reliance Jio expectedly made the largest acquisition acquiring 24,740 MHz for Rs 88,000 crore followed by Airtel, that bought 19,867 MHz for around Rs 43,000 crore.
Is there a scam?
Despite all the media hype, the auctions have not gone too well for the government. Of the 72,098 MHz offered in the auction, only 51,236 MHz or 71% of the spectrum was sold. Though Rs 1.5 lakh crore was raised from sales of the spectrum, the telecom minister had projected collections of ₹5 lakh crore. Moreover, Rs 4.3 lakh crore was the reserve price set for a total of 72 gigahertz (GHz) of spectrum in 22 telecom circles. However, only 35% of the reserve price was realized.
This has opened the door for former telecom minister A. Raja to allege that there was a ‘huge 5G scam’. Posing the question ‘Where has the money gone?’ he hinted darkly it was a set-up with corporate groups: “When you search for something on the internet, you will get results in 10 seconds when you use 2G, 5 seconds when you use 4G, and in 5G, you will get the results in a second. That is how efficient 5G is. When you compare the numbers based on this efficiency, the 5G auction should have attracted bids worth at least Rs 5-6 lakh crore.”
Responding in defence, minister Ashwini Vaishnaw said: Many bands were not sold, what was not sold remains with the government. How does that become a scam? The sold spectrum was valued at Rs 1,50,173 crore and the unsold spectrum was valued at Rs 2,81,432 crore, while the 600 MHz and 2300 MHz bands remained unsold entirely due to the “weak ecosystem of mobile telephony in these segments”.
Valuation vs affordability
But what’s sauce for the goose, is sauce for the gander. The basis of the ‘2G allocation scam’, dug up by the then Comptroller and Auditor General Vinod Rai in 2007-08, was a claim that minister Raja and his cohorts caused a presumptive loss of Rs 1.76 lakh crore to the exchequer. The ‘presumption’ was based on some fuzzy, unsubstantiated valuation.
On investigation, the CBI in its charge sheet lowered the estimated loss to Rs 20,000-30,000 crore.
Finally, in December 2017, a special court acquitted all the 26 accused including prime-accused – ministers Raja and Kanimozhi. In its ruling, the court noted: “Some people created a scam by artfully arranging a few selected facts and exaggerating things…”
We don’t know whether A Raja will now take Vaishnaw and others to court, but the latter’s claims that the spectrum the government has held back is valued at Rs 2.81 lakh crore is speculative. The real value is what the telecom operators will buy it at, and right now the mood is conservative and not upbeat.
Another aspect of the 2G scam debate was the proposition: Should government sell the spectrum at the highest value; or, should it be sold at affordable rates to keep mass communication services within reach of the common man? Over the last decade or two, governments have learnt the hard way: that if you squeeze the telecom companies too hard for revenue, they collapse.
On the flip side, the benefits are huge. For the consumer, 5G will expand the mobile ecosystem to a new extreme reality (XR), seamless IoT capabilities, and instant cloud access. For business and the economy, 5G is driving growth on a world scale and is estimated to generate $13.1 trillion and create nearly 23 million jobs by 2035. So fewer politics, please, and more tech empowerment for the masses.
Despite all the media hype, the 5G spectrum auctions have not gone too well for the government. Of the 72,098 MHz offered in the auction, only 51,236 MHz or 71% of the spectrum was sold. Though Rs 1.5 lakh crore was raised from sales of the spectrum, the telecom minister had earlier projected collections of Rs 5 lakh crore.