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4G Spectrum Auction

4G Spectrum Auction  

Why In News?

  • Recently 4g Spectrum Auction was held on 1 March and Jio becomes the biggest buyer
  • The spectrum auction bid ends at INR 77,815 crore

What Are Spectrum Auctions?

  • Spectrum is a range of radio waves used for communication purposes. It would include FM and AM radio broadcasts too and WiFi or Bluetooth.
  • Spectrum refers to the waves that surround us and can pass through anything. This means it needs to be regulated also which is why they are divided into bands.
  • If left at any frequency, there would be a complete chaos and the interference would be amplified. Thus band division is helpful.
  • A spectrum auction is a process whereby a government uses an auction system to sell the rights to transmit signals over specific bands of the electromagnetic spectrum and to assign scarce spectrum resources.
  • Devices such as cellphones and wireline telephones require signals to connect from one end to another. These signals are carried on airwaves (medium of radio waves), which must be sent at designated frequencies to avoid any kind of interference.

Ranges Of Spectrum | 4G Spectrum Auction

  • Telecom spectrum starts from 800MHz and goes up to 2300 MHz.
  • The radio channels are spread between 100-200 MegaHertz.
  • WiFi used 2.4 GHz earlier and shifted to 5 GHz now.
  • Most commonly we use 800 MHz, 900 MHz, 1800 MHz, 2100 MHz and 2300 MHz in cellular communication.
  • This is why various standards like GSM, WCDMA and LTE were developed over time to use these bands.

Why Is Spectrum Being Auctioned Now?

  • The last spectrum auctions were held in 2016, when the government offered 2,354.55 MHz at a reserve price of Rs 5.60 lakh crore.
  • Although the government managed to sell only 965 MHz – or about 40 per cent of the spectrum that was put up for sale – and the total value of bids received was just Rs 65,789 crore, the need for a new spectrum auction has arisen because the validity of the airwaves bought by companies is set to expire in 2021.   (4G Spectrum Auction )
  • In December 2020, the Union Cabinet cleared the sale of 2251.25 MHz of spectrum (for 4G) across seven frequency bands at a reserve price of Rs. 3.92 lakh crore.
  • This is likely to provide a boost to government revenue collections at a time when its inflows from other sources such as direct taxes, indirect taxes such as goods and services tax, have fallen sharply on account of restrictions to prevent the spread of Covid-19.

What is 2G, 3G and 4G? | 4G Spectrum Auction

  • This refers to the generation of technology used for communication. The oldest of the three is 2G while the 4G is still being developed. These are technologies that are developed to take advantage of various bands.
  • There is a reason why your phone requires a modem. This is because, with it, the phone can connect to various frequencies to give you uninterrupted services.
  • Earlier in India, 2G services were launched at 900MHz and later 1800MHz, which is also being used for 4G while 3G services ran on both 900MHz and 2100MHz.
  • The advantages of different bands come from the amount of energy used for each of them. The higher the frequency of the wave, the more the energy is required by it. This holds validity for any kind of spectrum like the telecom spectrum.
  • Lower frequencies are likely to use lesser power, travel far, not get affected by disturbances, and provide better coverage inside buildings.
  • This means that one would likely operate at the lowest frequency that can carry signals necessary for his applications. 1800MHz is considered to be the best frequency for coverage and capacity for 4G deployment.

What Was The Result Of Bidding?

  • Reliance Jio: Jio acquired 488.35 MHz of airwaves (in 3 bands i.e. 800 MHZ, 1800 MHZ, and 2300 MH. Expected bid was Rs. 23,863.8 crore but Jio bought the spectrum worth Rs.57,122.65. Jio increased its overall spectrum footprint by 55% to 1717 MHz (uplink+downlink) to give better service to the increasing customers.
  • Bharti Airtel: Airtel was expected to acquire spectrum in 900 MHz and 1800 MHz for Rs. 13,500 crores. But in this recent auction, Airtel acquired spectrum in 800 MHz, 2100 MHz, and 2300 MHz as well in addition to previously acquired spectrums, worth Rs. 18,699 crore.
  • Vodafone: Vodafone was cautious in acquiring the spectrum and acquired only 11.9 MHz spectrum for Rs. 1,993.4 crore.

When The Telecoms Will Pay?

  • There are different criteria to pay the amount after the bidding for different MHzs:
    • 700 MHz, 800 MHz and 900 MHz bands: 25% of the bidding to be paid now
    • 1800 MHz, 2100 MHz and above: 50% of the bidding amount to be paid now
  • Rest of the amount must be paid in 16 annual installments after 2 year moratorium
  • DOT will be releasing a demand notice and companies have to make the payment within 7-10 days after that.
  • Spectrum usage charges (SUC) for the spectrum acquired in this auction will be payable at the rate of 3% of adjusted gross revenue (AGR) of the licensee, excluding revenue from the wireline services.    (4G Spectrum Auction )

ALSO READ : https://www.brainyias.com/niti-aayog-polity/

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