Bargain with the locals: 5G frequencies may go under the hammer
As early as this year, the state may announce an auction for the sale of the right to use frequencies for 5G in the Russian Federation — this issue is being worked out in the Ministry of Finance. A source close to the agency, as well as high-ranking managers of cellular companies, told Izvestia about this. The authorities hope to get at least 50 billion rubles for them, according to one of Izvestia's interlocutors. Possible auctions for these frequencies will be the first large-scale sale of such a resource in the history of Russia. They can accelerate the development of 5G in the Russian Federation, but in general, the expediency of spending huge amounts on it is questionable — how to make money on it is not yet understood by signalmen anywhere in the world, and the opportunities offered by the use of fifth-generation communications are now completely closed by LTE, experts say.
How much can frequencies cost for fifth generation networks?
The Ministry of Digital Affairs is considering holding an auction for the right to use 5G frequencies in the second half of 2025, two senior sources in the cellular market told Izvestia. This was confirmed by an interlocutor in one of the organizations subordinate to the Ministry of Digital Affairs, as well as a specialist in radio frequency planning familiar with the situation.
According to one of Izvestia's sources, if the decision to hold auctions is made, frequencies in the range of 4.8–4.99 GHz will be put up for auction. For several years now, the authorities have been calling it the only possible fifth–generation cellular service for mass coverage of Russia: the 3.4-3.8 GHz frequencies optimal from the point of view of communications specialists in the Russian Federation are already occupied by communications facilities of other structures, including power ones, and 5G in higher bands cannot provide wide coverage of populated areas.
Operators, in turn, have repeatedly objected to the use of 4.8–4.99 GHz. In their opinion, it will be more expensive to cover the country with 5G using 4.8–4.99 GHz than using 3.4–3.8GHz, besides, much fewer phones support the higher range.
According to one of Izvestia's interlocutors, the Ministry of Finance plans to raise at least 50 billion rubles for the range put up for auction. Most likely, a 190 MHz wide frequency band will be presented at the auction, and they will be divided into two lots (approximately 90 MHz each), the source claims. Thus, only two of the federal mobile operators currently operating in Russia will be able to build 5G. The remaining two will have to cooperate with the winners of the bidding, the Izvestia source believes.
In Russia, auctions for radio frequencies began in 2015, while there are no decisions on their implementation on 5G, the Ministry of Finance told Izvestia.
— The deployment of 5G networks in Russia will begin with large cities. Fifth—generation commercial networks will appear in millionaires by 2030," the department added.
Izvestia's sources agree: the auction for 5G frequencies may be the first time in the history of Russia when operators will have to pay money — and a lot of it — for the allocation of bands necessary for the development of a new generation of cellular communications. But by the time they were conducted, the communications specialists already had the basic frequencies necessary to deploy networks in most commercially attractive regions of the Russian Federation. The companies received these frequencies at competitions.
— The first auction was in 2015 for frequencies in the 1800 MHz band: and they could be used for both GSM and LTE. At the same time, Russian operators have had LTE frequencies since 2011, and GSM frequencies since the early 1990s, recalls Leonid Konik, a partner at ComNews Research.
There was no need to buy out ranges before the auctions, but the state imposed a number of burdens on businesses, including in the form of social projects, Izvestia's interlocutors note.
"It seems rational to allocate 4.8—4.99 GHz spectrum to operators without an auction and without encumbrances, since taking into account the need for more frequent location of base stations compared to the "golden" 3.5 GHz band, 5G projects in today's conditions in large cities will be commercially unaffordable," another source in the cellular market believes.
The construction of 5G networks in this range will not pay off even with measures such as supporting manufacturers of Russian electronic products, stimulating demand for subscriber devices with support for 5G in the 4.8 GHz band, defining roadmaps for the introduction of domestic cryptography and SORM, he lists.
Izvestia sent requests to the largest Russian mobile operators. T2 declined to comment, while other companies did not respond.
What problems can 5G operators and subscribers face?
When 5G networks began to be deployed in the largest developed countries of the world a few years ago, market participants said that the technology would find applications in telemedicine, the Internet of Things, and unmanned vehicles. But in practice, there are still no applications and services, at least mass ones, that could not work without 5G, as long as LTE is enough for this, states one of the market participants.
At the same time, bypassing 5G, Russia may switch to sixth-generation cellular communications (6G), experts do not exclude. Sources in the cellular market told Izvestia about plans to create a consortium to produce equipment of this standard — more reliable, energy—efficient, and high-speed access - back in 2022. The first equipment of the new standard may appear in Russia by 2027, and sixth-generation commercial networks will be launched in ten years, they predicted. So far, fourth-generation cellular communications cover all user needs and 5G and 6G usage scenarios are not obvious, the experts added at the time.
Analysts' opinions on the impact of the 5G frequency auction on operators and their subscribers are also divided. Denis Kuskov, CEO of TelecomDaily, believes that the bidding will benefit subscribers: they will have access to 5G as soon as possible.
— Even if we imagine that all the frequencies will be bought by one operator, it is unlikely that he will delay the deployment of 5G networks: the cost of buying the right to use the frequencies must be recouped. And if so, the fifth—generation technology can appear on the mass market in the shortest possible time, at least in large cities," he believes.
Finally, we need to think about filling the budget — the free distribution of scarce frequency resources, which took place earlier, should end sometime: the authorities have been saying that it should be auctioned off since the early 2010s, he recalls. In many countries of the world, the sale of the right to use frequencies at auction is a common practice, Denis Kuskov points out.
On the one hand, the issue of allocating 5G frequencies to operators, which has been discussed since the second half of the 2010s, can finally be resolved. But the huge one-time costs of signalers can affect the tariffs for subscribers. In addition, 50 billion rubles is a huge amount for operators, who already have a lot of debts, expenses for network modernization and development, and so on, the expert says. It is possible that the telecom operators themselves will not pay for the frequencies, and consortia of telecom companies, large businesses and banks will go to auctions.
Leonid Konik, a partner at ComNews Research, considers holding frequency auctions to be a dubious idea. He does not rule out that one participant from the big four cellular companies will come to the auction, which will buy not so much scarce and necessary frequencies at the initial price, but the loyalty of the state. The rest of the market participants will ignore the 5G auction for economic reasons, he predicts.
— It is enough to recall Europe, in several of the largest countries of which (Germany, Great Britain, France, Italy, etc.) in 1999-2000, governments auctioned frequencies for 3G networks, collectively raising a record $190 billion. The downside of siphoning such a significant amount out of the pockets of cellular companies was the poor development of not only third—generation networks, but later LTE, which led Europe to lose competitiveness. The United States, Asian countries and other regions, unburdened by huge spending on frequencies, deployed LTE networks faster and received the growth hormone for the digital economy. And European mobile operators have been engaged in debt restructuring for many more years," the expert recalls.
The global developer of mobile communications standards, the 3GPP International Partnership— announced the release of the first specification of the 6G standard in the fourth quarter of 2028. Some countries, in particular South Korea, intend to deploy sixth-generation cellular networks as early as 2028.
— If an auction for 5G frequencies is held in Russia in mid— late 2025, then it will take 2026-2028 for operators to build fifth—generation networks even in large cities. As a result, having spent huge amounts of money on purchasing 5G equipment, radio frequency planning and network construction, cellular companies in the Russian Federation will lag behind the advanced countries of the world by a whole a generation," Leonid Konik believes.
Leonid Konik also has questions about the frequency range in which the Russian regulator intends to put up for a 5G auction. Not all smartphones and base stations support it, and due to one and a half times higher frequencies, operators will be forced to purchase and install 1.5 times more base stations than if they were built in the 3.4–3.8 GHz frequency range, he claims.
The situation is aggravated by the fact that mobile operators abroad have not been able to find 5G application scenarios that guarantee them significant income, he continues. Perhaps the only economically justifiable feature of 5G is the unloading of LTE networks, the volume of traffic in which is increasing every year. But for the operator, this de facto unloading means building a new, parallel cellular network, the expert notes.
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