Ahead of spectrum sale, telcos raise concerns over private networks

Telecom operators have demanded that services offered by them to private captive networks should be exempted from licence fee, spectrum charges and GST to ensure a level playing field with technology companies. The operators highlighted their concerns regarding private networks during the pre-bid conference organised by the Department of Telecommunications (DoT) on Monday.

Telecom operators also sought clarity on issues concerning spectrum usage charges and rollout obligations, among others, for the upcoming spectrum auction. The sale of airwaves is set to commence on July 26. A total of 72097.85 MHz of spectrum with a validity period of 20 years will be put up for auctions.

The telecom operators think technology companies will have an advantage in setting up private networks for enterprises as they don’t have to pay any levies. Telcos have already written to DoT that a level playing field should be ensured for orderly growth of the telecom industry when rolling out private networks.

“Rules applicable for captive non-public network (CNPN) should be made applicable for captive private network or private network provided by licensed telecom service providers. Otherwise, no investor will invest in taxed portfolio when same investment can be made without any tax burden through CNPN route,” Cellular Operators Association of India said in a letter to DoT.

The telcos on Monday again highlighted all the points mentioned in the letter during the pre-bid conference. The DoT has assured operators to look into their concerns. The telcos can also write to DoT seeking clarifications around private networks.

As per industry sources, if the government accepts the telcos’ demand, there will be good participation for the auction. “If telcos can get the same benefits in rolling out private networks, there will be good participation. Otherwise, the operators will not want to get 100 MHz in mid-band,” said an industry source.

The telcos have stressed that since a decision has already been taken to enable private networks getting spectrum directly from government, it must be ensured that such networks remain truly private and not communicate with public networks.

Under private networks, corporates can set up their own WiFi and data network instead of taking the services from any telecom service provider as is the norm today. However, for external communication, services of a telecom operator would be needed.

Telecom operators, however feel that since 5G is all about large-scale office automation, machine-to-machine communications, the bigger chunk of revenue would come from big corporates rather than retail customers. Therefore, they fear that if this lucrative market slips away from them they would be reduced to “dumb pipes”.