According to the guidelines for setting up Captive Non-Public Networks (CNPNs) issued by the Department of Telecommunications (DoT) on Monday evening, entities applying for spectrum must have a minimum net worth of Rs 100 crore. The applicant must be registered under company law and be “occupier of the geographical area/property on which he intends to set up the CNPN”. A private 5G captive network runs on mobile broadband technology and is set up by a private entity for use by a single organization. It is similar to a captive coal mine.
In order to obtain spectrum directly from the government, the DoT will undertake demand studies and then seek recommendations from the Telecommunications Regulatory Authority of India (TRAI) for the direct allocation of spectrum to these companies.
Spectrum rental rules
DoT officials said this process could take one to two years.
In the meantime, companies that wish to set up their own captive private 5G networks should obtain leased spectrum from carriers or ask telecom operators to set up the networks for them.
The DoT also released amendments to the Unified License and Unified Access Service License on Monday, allowing telecom operators to lease spectrum from CNPN licensees.
It also issued spectrum leasing rules, which allowed telecom operators to lease IMT (5G) spectrum auctioned to CNPN licensees. “In such a case, the telecommunications service provider must submit the details of the spectrum band, the quantum of spectrum, the rental period, the geographical area, the geographical coordinates of the logical perimeter of the defined premises and the use of spectrum on the Saral Sanchar portal within 15 days of the conclusion of the agreement,” the guidelines state.
The guidelines also specified that revenue from spectrum rental must be part of a telephone company’s gross revenue. Gross revenues are used to calculate a telephone company’s license and spectrum usage fees it pays to the government.
TV Ramachandran, chairman of the Broadband India Forum (BIF), said the Rs 100 crore net worth test “is a real drag” that would hamper the massive proliferation of captive 5G networks.
“We hope that the DoT will reconsider this proposal, because if implemented in its current form, only a few large tech companies would meet the Rs 100 crore net worth criteria while many other equally capable, scientific institutions known to tech startups, would ‘benefit from being eligible for direct 5G spectrum awards,’ Ramachandran told ET.
The BIF Chairman, however, welcomed the DoT’s decision not to charge independent companies any licensing/entrance fees for setting up 5G captive networks, saying the move was in line with Trai’s recommendations and the decision of the Cabinet on captive networks.
BIF’s membership includes technology companies such as Tata Consultancy Services, Cisco, Amazon, Google, Microsoft, Facebook owner Meta, Qualcomm and Intel.
The guidelines come amid a tug of war between telecom operators and tech companies over control of 5G spectrum to be used for CNPNs. Telecom operators are concerned that access to spectrum without auctions could allow technology companies to offer 5G services similar to those that operators would offer to businesses at a much lower cost.
Telcos lamented the DoT’s decision not to charge independent companies any licensing/entry fees.
“Basically, the government has paved the way for the administrative allocation of 5G spectrum to big tech companies that can easily meet the Rs 100 crore net worth criteria, which is grossly unfair as it expects operators telecom companies, on the contrary, are buying up those coveted airwaves by spending billions on the next auction,” said a senior executive at a Big 3 Telco.
He said this proposal “is tantamount to subsidizing big tech companies, as they will get higher quality spectrum by paying a nominal processing fee, while telecom operators will have to bid for expensive spectrum and pass on the higher costs to the consumer, which will ultimately make 5G unaffordable for the masses.”
Under DoT guidelines, companies may establish an isolated CNPN “inside/inside the premises” for their own use. The CNPN license may not be used for commercial telecommunications or connect the captive user’s network to public networks in any way.
Licensees with operations in more than one location do not need to apply for different licenses. As they need to set up captive private networks at new locations, they should update the geographic coordinates of the new locations on the Saral Sanchar portal before requesting spectrum.
All network elements, including the core network, must be established within the license operating area. However, businesses can connect different sites to captive networks using leased lines from telecommunications service providers.
CNPN licensees will be subject to existing foreign investment rules and will follow network security conditions and relevant instructions regarding the purchase of telecommunications equipment from trusted sources, according to the guidelines. They are also required to comply with the radiological regulations in force at the time the captive network is set up.
Whether renting from operators or obtaining directly from the government, the entities concerned must obtain authorization from SACFA (Permanent Advisory Committee on Frequency Allocation) online and ensure that the CNPN established does not interfere with any public network or the network of any other authorized spectrum user.
According to the Global Association of Mobile Providers, at least 794 organizations and 70 telecom operators are deploying private LTE or 5G networks. The manufacturing sector led with 140 companies involved in pilots and deployments, followed by the education and mining sectors.