Four million new jobs. $100 billion new investments in the telecom industry by 2022. Boosting the sector’s contribution to 8 per cent of GDP from 6 per cent in 2022. Seems like an excerpt from an election manifesto, right?
It’s not. This is the latest telecom policy of India: The National Digital Communications Policy (NDCP) 2018. With three strong pillars (Connect, Propel, and Secure India), the NDCP seeks to fulfil the Prime Minister’s vision of a truly Digital India.
Headed towards this vision, the country reached some major milestones on the way and is now standing on the edge of next digital wave. India today consumes nearly 1.5 billion GB of data per month and was ranked second in the world in terms of app downloads in 2018 by App Annie. What’s more, digital transactions on the Unified Payment Interface (UPI, an instant payment system developed by the National Payments Corporation of India) increased by more than 110-times over the last two years to 780 million monthly transactions in April 2019, on a base of more than 500 million data users.
Undoubtedly, the world’s most affordable data rate of INR18.50 ($0.26) per GB was one of the main contributors to this digital uptake.
Trying to capitalise on changing internet consumption habits, operators are also gearing up for what is expected to be the next big contributor in the digital future of India: the launch of 5G services.
With the twin promise of high throughput and low latency, 5G is expected to help India with digitalisation in sectors including manufacturing, healthcare and education to become a truly digital economy.
And yet, as much as it hopes to join world leaders by launching 5G in 2020, it cannot be denied that India lagged in introducing previous generations of technologies and the transition to 4G only picked up speed after Reliance Jio’s arrival. So, the key question is whether or not India is really prepared on a 360-degree basis to make the big jump in 2020?
To answer this overarching question, let’s first try to answer the basic questions that are critical to the launch of 5G.
Is the country’s infrastructure ready?
A lack of required infrastructure appears to be one of the major challenges for 5G rollout in India. Fibre backhaul, in particular, is expected to be one of the key enablers for 5G in India. But regulatory body TRAI states merely 22 per cent of towers in India are connected to fibre, unlike China where as much as 80 per cent of the towers are connected to fibre. Strategies like the Fibre First Initiative laid out in the NDCP 2018 require at least 60 per cent of the telecom towers to be connected by 2022, however industry experts believe there’s a need for 100 per cent, something which will be tough to achieve.
Another major infrastructure challenge is the current network of base stations and small cells. According to some experts, the current BTS capacity will require tenfold expansion (with the help of small cells) for a successful 5G rollout. Complicating this is the difficulty in getting right of way (RoW) permissions in the country. The lack of collaboration between the concerned authorities results in costs as high as $85,000 to $140,000 per km, including operations and maintenance.
The government is cognisant of the importance of fibre connectivity and the challenge that lies ahead in RoW permissions. To address this, it has provided a framework in the NDCP for seamless fibre deployments: “To accord the status of public utility to Optical fibre cable, promote collaboration models between state, centre and local authorities, and a requirement for mandatory telecom installation and cabling in national building code by 2022.”
This framework will help lower costs and tackle RoW challenges, which in turn is expected to encourage operators and infrastructure companies to increase the fibre footprint in the country. However, the key here is the successful implementation of proposed measures, which is a time consuming process and is unlikely to happen in 2019, or support a 5G rollout in 2020.
Have operators gained access to the required spectrum?
The need of the hour is harmonised spectrum at affordable rates in the 3,300MHz to 3,600MHz and mmWave bands. The regulatory body has already submitted its recommendations to the government on spectrum pricing, but the operators are not unanimously agreed on auction timing.
Some demand that spectrum should be auctioned quickly, while others want to wait given the debt-laden state of the industry and their stressed P&Ls. The government is yet to allocate spectrum for trials as well. Clearly, the uncertainty in the air is a big question mark as to when the airwaves should be auctioned for 5G, and whether or not operators would be able to purchase the spectrum at the recommended pricing.
Have sufficient real-life trials been conducted to make the commercial move in 2020?
Countries like South Korea and the US, the front-runners in 5G, were extensively conducting live trials in 2018 before commercial launches in 2019. Following suit, operators in countries including Australia, France, Italy, Spain, Saudi Arabia and UK, which are now planning their 5G launches later in 2019 or 2020, are already conducting live trials.
And in India? To date, only Bharti Airtel and Reliance Jio have conducted field trials. The limited trials can be partly attributed to the fact that spectrum for 5G trials has not been allocated and, partly, to limited clarity around applicable use cases. Regardless, without a base of trials, launching services will be difficult.
Is the industry aware of where and how 5G would be used in India?
Time and again Industry experts have mentioned that the use cases foreseen or tested globally might, or might not, be applicable to India and the country would have to come up with its own use cases. On one hand, the industry acknowledges the value of features like low latency and high capacity in sectors like manufacturing, healthcare and education. On the other hand, the exact use cases in these sectors are still unknown. The only use case that the industry is sure of is high-speed broadband to homes (fixed wireless): a recent survey by ET Telecom revealed 85 per cent of participants cited this as the most relevant use case for India.
Are operators prepared to invest in 5G in the current scenario?
Already sweating profusely under the rising pile of INR8 trillion debt, the Indian telecom sector is apprehensive about investing too much on 5G too soon. India is a price-sensitive market and the price wars triggered by Reliance Jio’s entry led to declining ARPUs in the last three years (see chart, above, click to enlarge), impacting their cash reserves. Declining ARPUs along with an increasing capex-to-revenue ratio makes 5G investment decisions more difficult.
What does this all mean?
Irrespective of the operator, the required infrastructure and access to adequate spectrum are essentials for a 5G launch. As these get established, operators can be proactive in conducting trials, investing in network upgrades and exploring use cases.
Reliance Jio believes it is ready for commercial 5G launch in six months of spectrum allocation. The company already has an all IP-based network and a 5G-ready LTE network. Moreover, it is laying out the fibre optic network on a scale for its fixed broadband services, which is expected to help it to launch seamless 5G services.
Airtel, likewise, has revealed plans to launch 5G building on massive MIMO field trials. And, every major operator in the market has begun collaborating with vendors on potential rollout and technology evolution plans.
Although, it is tough to place bets on who will lead the 5G launch in the market, there is a likelihood of 5G becoming reality in 2020 if the spectrum is auctioned in a timely manner. Whether or not it will become a mass reality is a million dollar question, awaited to be answered in 2020.
– Radhika Gupta – head of data acquisition, strategy, GSMA Intelligence
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.