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5G spectrum auction seems likely to be delayed

COAI in response to a media report that DoT is considering revising its proposal on allowing enterprises to build their own 5G private networks for captive feeds, and the revised proposal will have the provision that the government can directly allocate spectrum to enterprises to build such networks, COAI has sought intervention from Ashwini Vasihnaw, Minister for Communications, with copies to PD Vaghela, Chairman TRAI, K. Rajaraman, IAS, Secretary DoT, A.K. Tiwari, Member (T), DCC, Dilip Padhye, Member (F), DCC, DoT, and Nizamul Haq, Member (S), DCC, DoT.

“There will be no business case for rollout of 5G networks then,” says COAI. “Worldwide it has been seen statistically that wherever 5G has been rolled out, there is hardly any consequent revenue increment from the retail segment. The revenue and efficiency enhancement can happen only from the Enterprise segment.

The needs of voice and data of the entire nation is being adequately met by the TSPs through their 4G networks today, argues the association. As such the revenues of TSPs are not going to increase from the retail segment despite very heavy capital investments for rollout of 5G networks. This is further accentuated because India is a highly price sensitive market especially in the consumer segment.

The new segment that would be benefitted by 5G services of the TSPs is the enterprise segment including manufacturing, logistics, education, hospitals, campuses, factories, etc. The telcos have also conducted successful 5G trials for many of these use cases in the last one year. With 5G auction, the TSPs are targeting the enterprise segment for revenue enhancement and overall increase in productivity and efficiency. This is where TSPs 5G business case lies.

If private captive networks for enterprises are set up independently by other entities then this would mean dramatically altering the industry dynamics and hurting the financial health of the industry and will strike at the very heart of the business case.

If independent entities set up private captive networks with direct 5G spectrum allotment by DoT, the business case of TSPs will get severely degraded. This will diminish the revenue so much that there will be no viable business case left for the TSPs and there will not remain any need for 5G Networks rollout by TSPs.”

Broadband India Forum (BIF) dismissed COAI’s position and argued that the stance that private 5G networks would lead to revenue losses for the telcos, as expressed by certain entities, is a ”misconception”.

BIF also said indoor private campus networks do not truncate legitimate revenue of the telecom service providers but help to enhance productivity and efficiency.

A more efficient captive network through private 5G would lead to increased productivity for the enterprise, which would help grow business activities and external communications, in the process driving better revenues for the telcos, it said.

BIF has urged the government to earmark a certain amount of exclusive spectrum for non-public/private 5G networks in each type of spectrum band, as recommended by sector regulator TRAI.

It has made a passionate plea for the direct allocation of spectrum to enterprises and organizations at a nominal administrative fee, citing global best practices.

”Facilitate a light-touch online portal based paperless regime for acquiring permission/license for ‘Captive Wireless Private Network (CWPN)’ within 30 days of application, (as recommended by TRAI) to enable ease of doing business,” said BIF.

Describing itself as a technology-neutral and service agnostic entity ”with no bias or inclination towards any organization/ service/ technology/ vertical”, BIF emphasized that India needs private 5G to accelerate digital transformation, ‘Atmanirbharta’ and Industry 4.0.

India needs higher efficiencies in verticals like manufacturing, healthcare, education, agriculture, financial inclusion, and many other areas to accelerate the process of digital transformation, which is a national priority.

”This can best be achieved only through the use of private 5G networks,” it said, giving a point-by-point rebuttal to arguments put forth by telecom operators who have maintained that there is no justification for allocating radiowaves directly to enterprises for operating private captive networks.

Mobile operators are of the view that as licensed telcos, they are fully capable of providing all customized solutions most competitively and economically to private and public sector entities.

Countering this, BIF said ”private 5G networks are the best setup by enterprises themselves as they are the best qualified to do so.” Citing an example, it said a Maruti or an Apollo would know its system and requirements far better than anyone else, and therefore, would be able to customise and design the network and applications accordingly.

Most of the revenues of the telcos are external and that remains completely untouched, and hence they remain protected as does government revenue, it said.

The non-public networks or private networks constitute additional revenue streams for the telcos and government. This revenue stream has not yet been tapped, BIF observed.

”There would be no revenue loss to the Government on account of direct spectrum allocation for private 5G networks to enterprises, as they shall purchase the spectrum at a price to be fixed by the Government and allocated administratively,” it added.

All eyes are on the Union Cabinet to take the final call. In any case, the 5G spectrum auction seems set to be delayed again. Even after cabinet approval, it may take over a month for the government to issue the notice inviting applications, appoint an agency to conduct the auction, and finalize terms and conditions.

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