Anyone, including Huawei, can participate in 5G auction – India

Japanese e-commerce player Rakuten launched a 5G network with off-the-shelf items last year

Responding to question on whether Chinese companies like Huawei can purchase 5G spectrum in the upcoming auction, India’s communications ministry said any company of any country can participate in any spectrum auction in India.

“..they [foreign companies] are allowed to participate in the auctions directly and apply for a Unified License subsequently through an Indian company, where they hold equity stake, with a maximum foreign equity up to 100% as per extant guidelines,” said junior minister for telecom, Sanjay Dhotre, in reply to a question whether Chinese companies, including Huawei, will be allowed to participate in 5G auctions.

In 2010, Qualcomm — a US-based equipment maker — successfully purchased 4G spectrum for four circles including Mumbai, Delhi, Haryana and Kerala, after participating directly in India’s 4G spectrum.

Telecom equipment vendors typically invest in spectrum as a way to encourage or support telecom operators to use a technology or platform that they are developing or involved in.

At the time of the 2010 4G auction, there were two main 4G technologies — WiMax and LTE, and Qualcomm was in the LTE camp.

Soon, LTE became the clear platform of choice for 4G mobile operators and Qualcomm too sold its spectrum to Bharti Airtel.

A somewhat similar battle is on the horizon with 5G as well. As 5G standards near finalization, most traditional equipment vendors have found their dominance of the wireless ecosystem challenged by the emergence of several ‘open’ software, such as Open RAN or O-RAN.

Such software, often developed by non-profit and collaborative outfits, allow telecom operators to build their own 5G equipment using commercially available off-the-shelf items, such as ARM-based boards.

Several operators, such as Bharti Airtel and Reliance Jio, have indicated that they favor such an approach to the traditional model of outsourcing everything to a big vendor. Japanese e-commerce vendor Rakuten has been one of the first to successfully build a network based on this approach.

In such circumstances, there is a high chance of global equipment vendors crashing the 5G auction party and walking away with chunks of spectrum in an attempt to gain a foothold in the 5G equipment market in India.

However, under the rules, these companies will have to soon transfer any such spectrum purchased to a company incorporated in India.

They can retain ownership of spectrum won in auctions by transferring the same to an Indian company that they own fully, and seeking a telecom license for the Indian unit.

“A Unified License can only be awarded to an Indian Company. Hence, any foreign applicants will need to form or acquire an Indian company to obtain a Unified License,” Dhotre added. 

However, telecom licenses in India are granted only after much scrutiny by security agencies, and a company owned by a foreign player — particularly from China — may find it difficult to pass the home ministry’s security checks.