Extensive deployment of 5G services in India is still a couple of years away, and the current pandemic may delay things further. However, when introduced and implemented effectively, this technology can help India’s economy grow by leaps and bounds.
By Nijhum Rudra
The telecommunications sector has benefited immensely from top-notch technology. Widespread Internet access has played a huge role in increasing the popularity of mobiles among every age group today. It all started with 2G networks, followed by 3G and 4G, and now the industry is transitioning into a new phase—5G. The 5G networks promise increased data speed, while also lowering the cost of operations. With enhanced speed, innovative business models and state-of-art applications are expected in sectors such as industrial, commercial, education, healthcare, agriculture and finance. All of these require speedier and uninterrupted networks that only 5G can enable.
The ultra-low latency of 5G networks will also help the growth of various new and emerging technologies such as IoT, AI, VR, AR, machine-to-machine learning and blockchain, as well as new opportunities in established high-speed broadband networks. By driving the growth of new business operations and applications, 5G is expected to increase revenue generating platforms for telecom operators.
The countries that have begun deploying 5G networks include Australia, South Korea, Taiwan, Japan, USA, UK and Germany. These countries lead in terms of 5G network deployment within the Asia Pacific, and most of them have 5G non-standalone architectures that support 4G/LTE infrastructure for higher speeds. India had just 322 million wireless broadband subscribers in 2017, a number that Edelweiss Research estimates will jump to a whopping 1 billion by 2025 with the deployment of 5G (Figure 1). This is crucial, as telecom forms the very backbone of India’s digital revolution.
Potential markets of 5G communication
As per IDC’s carrier transformation survey run at the APeJ (Asia-Pacific excluding Japan) level, the top three 5G use cases for CXOs of telecom companies remain massive IoT, remote-controlled automation, and multi-access edge computing. In the current scenario, a gamut of interconnected products and services (smart homes, smart refrigerators, smart HVAC, smart cars, CCTVs, smart devices, etc) might be ideal play for these companies, but India is still at a very nascent stage in 5G adoption.
When can we expect 5G in India
As per the OECD (Organisation for Economic Cooperation and Development) Committee on Digital Economic Policy, 5G will not only amplify the country’s GDP, but will also open up newer avenues of employment and digitise the economy. It will open up opportunities for India to connect with global markets and take advantage of the economies of scale. The 5G High-Level Forum is drawing up an action plan in this direction. Once implemented, 5G will open up new avenues of revenue for service providers.
Yash Jethani, research manager, regional telecommunications team, IDC Asia Pacific, adds, “COVID-19 has definitely impacted the progress. There are now signs of coming out of it, amidst fresh PE investments/FDI in the sector as well as regulatory support, but capex spending, as per IDC, is expected to remain muted for Indian operators over till 2024. This is largely due to the fact that any increase in ARPU (Average revenue per user) will not immediately result in an increase in the capex. Plus, Reliance Jio has already shown its interest in vendor-agnostic procurement, so the dynamics of the industry could shift from capex-led investments to opex-led ones, with a move towards open source and cloud based workloads. So once the auction takes place next year in an optimistic scenario, 5G test licences will be followed by technology trials, industry formulation, as well as global and regional cooperation with network sharing. So, the actual commercialisation is only expected by 2022/23, realistically speaking.
According to a report by the COAI, the telecom industry along with DoT is leaving no stone unturned in making India 5G ready and by next year, the country will be on the 5G map. To ensure commercial deployment, the 5G High-Level Forum has been instituted, whereby experts across the globe are collaborating and discussing the challenges and opportunities, in order to make India a true 5G powered nation. Prime Minister Narendra Modi’s ambitious Digital India programme, along with better telecom and Internet connectivity will combine to drive 5G adoption. 5G will open up new opportunities and accelerate India’s transition towards digital empowerment.
|The sectors 5G will be used extensively in: What the experts say|
|“Due to the ongoing COVID-19 crisis, we have seen how much we can leverage a robust and fast broadband connection. I believe we have several use cases like industrial automation, high-speed home broadband and immersive collaboration, be it for education, healthcare or just office collaboration. Then there are use cases like ultra-rich multimedia content, whereby we can use AR/VR for entertainment and gaming.”|
|“With 5G, technologies such as autonomous/driverless cars, smart transportation and logistics, smart farming, drone patrolling for road safety, holograms and remote robotic healthcare are expected to enter our world, and become more and more pervasive by the day. The technology is poised to open up a plethora of possibilities in terms of business models, better education, healthcare, smart cities, smart manufacturing, intelligent logistics and overall, enhanced lifestyles. The potential can be imagined by the prediction that by 2026, the revenue for India’s telecom operators is estimated to reach US$ 619 billion.”|
|“For operators, the new areas are clearly in education, healthcare, government (the public sector as IDC defines it) in the COVID environment, but in the long term, driverless connected cars, 4K/8K streaming, smart cities, MR/immersive video are some interesting use cases for Asia Pacific operators. India’s aggregate telecom spend on fixed data and fixed voice is 30 per cent and 40 per cent, respectively, from the B2C segment. The B2C spend is even more predominant in the mobile data and mobile voice segments. Hence, for any future uptake in the market, a focus on B2B will give operators newer avenues to explore. With newer avenues, there will be numerous opportunities to exploit under the government’s Digital India drive.”|
5G market forecast
Various telecom experts stated that by 2035, the entire world will understand the huge potential and benefits of 5G as it is expected to positively transform various industrial sectors, and is likely to lead to the production of up to US$ 12 trillion worth of goods and services. The success of 5G requires huge global investments, which are speculated to surpass US$ 3.5 trillion between 2020-2035.
The global overall expenditure on 5G is projected to reach around US$ 88 billion by 2023, according to Heavy Reading’s Mobile Operator 5G Capex report. The statistics in Figure 2 display the expected global yearly growth of investments in the telecommunications industry from 2019-2023. IDC expects the total 5G and LTE router/gateway market to grow by US$ 3 billion in 2024 worldwide, at a compound annual growth rate (CAGR) of 21.2 per cent. It projects the number of 5G connections to grow by 1.01 billion in 2023.
Jethani further adds, “The domestic 5G mobile phone market is still expected to be below the US$ 50 million mark in 2020. There is still a long way to go for a mature ecosystem that justifies the capex by telecom operators. Jio in its current shape and form, with all PE investments, is best poised to take a lead in the 5G space—but it can only happen with the best mix of B2B and B2C/B2B2C models. As for any technology generation to succeed in India, there needs to be a timely push and a timely pull from the regulatory department in the right direction, and that’s what India needs.
The views of Rajan S. Mathews, director general, COAI (Cellular Operators Association of India) on this are, “Initially, 5G applications and software will require a considerable amount of funding by the government. The 5G HLF (5G High-Level Forum) has recommended an all-encompassing planning estimate of US$ 39.34 million in the first year, US$ 52.45 million in the second, US$ 65.57 million in the third and US$ 52.45 million in the fourth year. A few roadblocks and challenges need to be addressed for 5G to become a resounding reality in India.”
Challenges of 5G communication
The biggest challenge for 5G implementation is of course handset costs and localised use cases. The high cost of 5G smartphones will always be a barrier to their uptake. Currently, 5G smartphones average ₹ 40,000 and upwards. This means that, initially, adoption will be limited. Besides, due to the COVID-19 crisis, manufacturing has been impacted and so is the supply chain. Other challenges are mostly around being able to keep the infrastructure up in such difficult times such as a lockdown. Field forces have faced a lot of issues in keeping towers and cables up and running. There was also a quick requirement for expanding the networks’ capacities to accommodate online teaching and work from home for most companies. That meant working round and against the clock. All this with the telcos not doing well financially and yet having to meet so many obligations.
According to COAI, the issues about the spectrum cannot be discounted. Traditionally, spectrum has always been expensive. While in India, 20MHz blocks in the 3,300MHz-3,600MHz band for 5G services have been priced at US$ 49.20 million per MHz by TRAI in its recommendations, in Korea, the same band was priced at US$ 17.2 million per MHz, in auctions. The most critical factor in the uptake of 5G spectrum would be its price. The 5G High-Level Forum has recommended early allocation of 5G spectrum, increasing the quantum of spectrum available and reducing the prices. The initial expenses on equipment will also be costly.
For the effective deployment of 5G, operators will have to wait for the current pandemic to pass and then analyse what makes sense for their infrastructure procurement. The latency, throughput, and scale are important factors for any use case deployment, but battling the current challenges pertaining to procurement, proving the ROI for a use case, cultural alignment with DevOps teams, adoption of microservices, and seamless use of orchestration platforms remain crucial for 5G’s success in India.