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5G allocation: Technology and telecom companies should tango

The auction for the 5G network is all set to commence next month. But, the controversy around the allocation of 5G airwaves to private enterprises is refusing to die down.

With the government allowing direct spectrum allotments to independent companies for setting up captive private 5G networks, global technology giants and Indian IT biggies are very keen to acquire the same.

This has directly pitted them against telecom operators like Reliance Jio, Airtel, & Vodafone. Indian telcos fear that such allotment will eat into the lucrative 5G enterprise business with technology firms grabbing large market share.

Industry experts believe that while private enterprises should be given 5G airwaves, the government should create a level-playing field concerning pricing to make it a win-win case for both telcos and technology firms.

“Globally, 5G licenses are given to enterprises also. There are a lot of private networks. You don’t need to go to the telecom operators for getting your own private network. The government has started auctioning spectrum to telcos and now, they are trying to follow the global thing (in 5G spectrum allocation). If 5G is given to technology firms, they will build their private network and they have their captive centres in India,” V Balakrishnan, Chairman of Exfinity Ventures & Former CFO of Infosys told DH.

He said private enterprises should be allowed to get 5G airwaves but telcos’ concern for a level-playing field on the pricing of the network should also be addressed.

“If you look at telcos, their profitable business is enterprises. So, these players can’t afford to lose the profitable business after spending so much money on the spectrum,” Balakrishnan added.

Most analysts predict that the business case for 5G will be heavily dependent on enterprise business. Some estimates suggest around 40% of overall 5G revenues of domestic telecom firms will come up enterprise business alone.

“5G has more enterprise use cases. It will see more applications in autonomous driving, smart manufacturing, telehealth, digital learning, and many more. If technology companies have their own 5G spectrum, they can showcase PoCs (proof of concepts) to clients without depending on telcos. Owning own network will help in penetration of Industry 4.0 a lot better,” Pareekh Jain, an IT outsourcing advisor & Founder of Pareekh Consulting.

Indian market may not hold the key
However, industry insiders also opined that the Indian market might not be the real motivation behind owning 5G network for Indian IT services companies like Tata Consultancy Services and Infosys among others.

Though the Indian market holds a lot of significance for companies like Google, Microsoft, Facebook, and others; Indian IT firms are keener to acquire 5G airwaves for showcasing their expertise to global clients for participating in large transformational deals in the telecom sector.

“Technology firms want their own spectrum so that they can develop various use cases. First, these companies will showcase their capabilities, and then, they can participate in 5G-related digital transformation contracts globally. This is critical because India doesn’t have 5G deployment yet. For Indian IT companies, the domestic market may not be of immediate interest as compared to telcos or other technology firms,” said Jain of Pareekh Consulting.

Other analysts said that 5G would throw open a wide range of opportunities for all IT services companies globally. In India, smart manufacturing will gain pace on the back of the government’s push for ‘Make in India’.

“There are a lot of opportunities in IoT and Industrial IoT space that will be created with 5G rollout in India. We have already seen global tech firms like IBM, Qualcomm seeing some traction and these firms are well-placed to cash in emerging opportunities in this space. Among Indian firms TCS, Tata Communications, Tech Mahindra, and Infosys among others can also benefit,” said Mrinal Rai, Principal Analyst at global consulting firm, ISG.

No conflict of interest
While the tussle between telcos and tech companies over spectrum allotment continues, most experts opine that the relationship between these two sets of companies is symbiotic in nature. Because many of these technology firms work as service providers for Indian telecom companies. For instance, companies like TCS, Tech Mahindra, and IBM work with Airtel in various areas. Similarly, Google and Facebook are investee firms in Reliance Jio Platforms.

“There is no conflict of interest. The IT company provides a service and the telecom operator is a customer,” said Balakrishnan. “These companies compete in some areas and collaborate in some others. So, there is no question of any conflict of interest in the current case,” said a source.

From this perspective, 5G has the potential of changing the industrial landscape in India with accelerated digital adoption. Therefore, the government should come up with a fine balance on various aspects including the pricing for deep collaboration between telecom firms and technology companies. Because any unhealthy competition delaying the rollout of 5G may prove costly for India given the current uncertain economic environment. Deccan Herald

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