Govt feels BSNL's continued survival is in its strategic interest\n\n\n\nGovernment of India today said it has decided to give 5G spectrum to state-owned telecom service provider Bharat Sanchar Nigam Ltd without the company participating in the upcoming spectrum auction.\n\n\n\nIn 2010, the government had set apart one block of 3G and 4G spectrum for BSNL, even as other telecom operators had to fight long and hard to get their share.\n\n\n\nAt the time, the pre-allotment policy was justified on the grounds that 3G and 4G services were strategic in nature and a government presence in these services would be in the long-term interests of the country.\n\n\n\nHowever, despite being 'forced' to take the spectrum, BSNL was billed for the same. \n\n\n\nThe company, which was not very pleased at having to shell out thousands of crores of rupees to for something it didn't ask for, failed to make much headway with launching a 4G service for nearly eight years. \n\n\n\nMoreover, the company -- which had neither the cash nor the management bandwidth to launch 4G services -- soon fell on hard times, forcing the government to take back some of the spectrum and return some of the cash. \n\n\n\nRealizing that BSNL would not be able to survive without playing in the 4G market, the government this year decided to give some more 4G spectrum to BSNL. This time, however, there was no scope of getting any cash from the nearly bankrupt company. \n\n\n\nInstead, the government took more shares of BSNL in return for the spectrum. However, given that the government already owns 100% of the shares of BSNL -- whose net worth had been eroded by tens of thousands of crores of losses -- the extra shares that the government is receiving from BSNL will make little difference to either the government or the company.\n\n\n\nGoing by a statement today from Sanjay Dhotre, junior minister for communications, something similar is likely to be carried out next year when the 5G spectrum auction takes place.\n\n\n\n"The cabinet has approved that allotment of spectrum for 5G services will also be made to BSNL on the same principle followed for allotment of spectrum for 4G services," he said.\n\n\n\nBAD NEWS FOR OTHERS?\n\n\n\nThe move to pre-allocate 5G spectrum to BSNL is likely to be bad news for the remaining players in the market, given that about half the spectrum identified internationally for such services are already reserved for satellite communications in India.\n\n\n\nWhile globally, about 600 MHz of spectrum has been identified as 5G-suitable, in India, only about 275 MHz is available.\n\n\n\nGiven that each telecom company is likely to bid for 100 MHz of 5G spectrum, the 275 MHz that is available in India would not be enough to fulfill the needs of the three private players -- Reliance JIo, Bharti Airtel and Vodafone Idea.\n\n\n\nNow, with the government reserving one chunk -- likely to be of 50 MHz -- for BSNL, the available quantity for the others will reduce further to 225 MHz.\n\n\n\nTRAI, the telecom regulator, has already recommended putting a cap of 100 MHz on the bids put in by each player in the auction.\n\n\n\nHowever, if the total quantity is only 225 MHz, the government may go for a cap of 75 MHz so as to accommodate three players, instead of leaving the third player with just 25 MHz and making it practically impossible for the player to launch a competitive 5G network.