Mint Asia ST - - News -

In­dia’s way ahead

As other coun­tries move ahead, the In­dian gov­ern­ment, too, has re­peat­edly stated its in­ten­tion to ‘not miss the 5G bus’ and en­sure roll-out by 2020, af­ter hav­ing missed the ‘2G, 3G and 4G buses’. A closer look, how­ever, is re­quired with re­gard to the pre­pared­ness of the in­dus­try, es­pe­cially given the fi­nan­cial health of the tele­com sec­tor, the hes­i­tancy among do­mes­tic banks to lend to op­er­a­tors, and the cur­rent pres­sure on tar­iffs.

In­dian spec­trum is also rather ex­pen­sive. The In­dian tele­com regulator has rec­om­mended auc­tion­ing 20MHZ blocks in the 3,300-3,600MHZ band for 5G ser­vices at a price of ₹ 492 crore per MHZ. In South Korea, the same band was priced at roughly ₹ 131 crore per MHZ in auc­tions held in June.

In or­der to set a road map for the roll-out of 5G, the gov­ern­ment had in Septem­ber last year set up a high-level fo­rum, which, in its re­port, sug­gested early al­lo­ca­tion of 5G spec­trum, in­creas­ing the quan­tum of spec­trum avail­able, and lower spec­trum pric­ing.

The panel has also sug­gested three ini­tia­tives—at­tract global 5G con­fer­ence events to In­dia, set up na­tional 5G events, and the cre­ation of a com­pre­hen­sive pro­gramme to de­velop In­dia-spe­cific 5G ap­pli­ca­tions.

As far as bud­getary pro­vi­sions are con­cerned, 5G ap­pli­ca­tions and soft­ware will re­quire some form of ini­tial fund­ing by the gov­ern­ment. The com­mit­tee has rec­om­mended a broad plan­ning es­ti­mate of ₹ 300 crore in the first year, ₹ 400 crore in the sec­ond, ₹ 500 crore in the third and ₹ 400 crore in the fourth year.

By act­ing early on adop­tion, In­dia can ac­cel­er­ate the 5G div­i­dend and also be­come an in­no­va­tor in ap­pli­ca­tions, but it will also mean that the ini­tial in­vest­ment on equip­ment will be more ex­pen­sive when try­ing to be ahead of the curve. The gov­ern­ment has al­ready started the process to in­vite global tele­com gear mak­ers to con­duct tri­als in In­dia.

Key chal­lenges

The Cel­lu­lar Op­er­a­tors As­so­ci­a­tion of In­dia or COAI, on its part, be­lieves In­dia should not rush to sell spec­trum for 5G. “We think the auc­tion should be held as close to 2020 as pos­si­ble as there will be more clar­ity on the stan­dards for 5G,” Ra­jan Mathews, direc­tor gen­eral of COAI, said. There is also un­cer­tainty about the fi­nan­cial health of the in­dus­try, which ul­ti­mately has to bid for the spec­trum on which 5G data will flow, since rev­enues of all the op­er­a­tors have de­clined af­ter the en­try of Re­liance Jio in Septem­ber 2016. Af­ter all, huge in­vest­ments would be re­quired to up­date the tele­com back­bone and air­waves to 5G.

“Tim­ing is a cru­cial cri­te­rion (for 5G auc­tion),” a se­nior Depart­ment of Tele­com (DOT) of­fi­cial said, re­quest­ing anonymity. “Where is the money? Where is the ecosys­tem for the 3,300-3,600MHZ band? There is noth­ing to show that a spec­trum auc­tion is go­ing to be suc­cess­ful. The op­er­a­tors won’t pay a sin­gle paisa over re­serve price (sug­gested by the Tele­com Reg­u­la­tory Author­ity of In­dia),” the of­fi­cial added.

Spec­trum auc­tion is a ma­jor source of rev­enue for the ex­che­quer. There was no auc­tion in 2017-18, while in 2016-17 the gov­ern­ment had raised ₹ 65,789 crore through spec­trum sale, a mere frac­tion of the ₹ 5.63 tril­lion worth of spec­trum it had put up for sale.

“More­over, op­er­a­tors in­vested huge amounts of money in 4G very re­cently. Banks are not will­ing to lend. Also, are we ready to use have 5G? What per­cent­age of In­dia’s pop­u­la­tion re­quires 5G?” the of­fi­cial cited above said.

In­dian tele­com op­er­a­tors don’t seem to be in a hurry to move to 5G when 4G de­ploy­ments are still at a nascent stage. “If there were any spec­trum auc­tions over the next two years, we be­lieve par­tic­i­pa­tion will be re­stricted to Bharti (Air­tel) and Jio only,” HSBC Global Re­search said in a note dated 31 Au­gust. “Voda­fone In­dia and Idea, in the next two years, are likely to fo­cus more on work­ing out spec­trum syn­er­gies and un­likely to add more spec­trum,” the note said. The gov­ern­ment, as of now, is look­ing at auc­tions prob­a­bly in the sec­ond half of 2019, tele­com sec­re­tary Aruna Sun­darara­jan had told on 23 Septem­ber. How­ever, be­fore the auc­tion, DOT wants to pro­vide a oneyear win­dow for tri­als to hap­pen with ex­per­i­men­tal spec­trum. 5G will also re­quire a mas­sive level of trans­for­ma­tion and tele­com op­er­a­tors need to de­velop that ca­pa­bil­ity in the form of skills, com­pe­tence and oper­at­ing models be­yond the in­vest­ments which are re­quired. “Tele­com op­er­a­tors need cloud in­fra­struc­ture, dis­trib­uted net­work ar­chi­tec­ture, and an ag­ile oper­at­ing model to suc­cess­fully op­er­ate a 5G net­work. As such, what is the rush for 5G when we lack the busi­ness case to jus­tify in­vest­ments and there is also a com­pet­ing need to sta­bi­lize and en­hance our 4G net­works,” said Am­resh Nan­dan, re­search vice-pres­i­dent, Gart­ner. While in­dus­try may not be ready to brace for 5G, In­dia’s de­pen­dence on this tech­nol­ogy is huge, given the set of prom­ises made by the cur­rent gov­ern­ment. “The gov­ern­ment per­spec­tive is that 5G is go­ing to be ab­so­lutely crit­i­cal in In­dia... For in­stance, if we look at JAM (Jan Dhan-aad­haar-mo­bile) pro­gramme, the for­mal­iza­tion of large parts of the econ­omy, trans­form­ing agri­cul­ture, get­ting health­care—all these are pri­or­i­ties of the gov­ern­ment,” an­other se­nior DOT of­fi­cial said, seek­ing anonymity. “If we are not able to get 5G out, we may not be able to de­liver on a lot of these things (ser­vices), es­pe­cially to the ru­ral pop­u­la­tion,” the of­fi­cial added.

The good news, how­ever, is that the lat­est en­trant, Re­liance Jio, al­ready has an Ip-ready net­work. 5G will be rel­a­tively easy to roll out for Jio be­cause the com­pany has next-gen­er­a­tion ar­chi­tec­ture al­ready in place. Con­se­quently, to stay in the game, ri­vals Voda­fone Idea and Air­tel will also need to in­vest sig­nif­i­cantly.

The big­ger is­sue is whether the re­lated an­cil­lary in­dus­tries are ready. Apart from the spec­trum, a 5G-ready coun­try needs a slew of play­ers to pro­vide a ser­vice plat­form, de­liv­ery model, lo­gis­tics sup­port, and sev­eral other niche ser­vices. From that stand­point, the con­ver­sa­tion on 5G in In­dia has not even be­gun.

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