A roadmap for India telecoms industry

India’s telecom industry has been going through a Dickensian best of times, worst of times phase in recent months. After a significant lull, India concluded its first spectrum auction in recent memory in March 2021, putting up spectrum for auction in multiple bands, including 700, 800, 900, 1800, 2100, 2300 and 2500 MHz bands. These frequencies cut across 2G, 3G and 4G service bands and included both FDD (paired) and TDD (unpaired) bands.

5G auctions are unlikely before March 2022
5G spectrum was not a part of the recently concluded auction. The government has already indicated its intent to hold a spectrum auction for the 3.5 GHz band in late 2021.

However, we believe that this timeline has a very good chance of spilling into early 2022. There are several factors at play here, but we will focus on what we believe to be the top three challenges that need to be overcome.

For these auctions to be successful, India’s regulatory and policy making bodies need to sort out long standing issues related to spectrum pricing and the quantum of spectrum being made available for 5G in the sub-6 GHz bands.

Furthermore, there needs to be clarity on the desire of at least some of India’s telcos are looking at a Made in India technology stack approach to 5G.

The juxtaposition of India’s desire to build a local manufacturing base for telecom equipment, ongoing geopolitical challenges, as well as recent momentum behind technologies like OpenRAN and telco cloud, has opened a window of opportunity for an Indian ecosystem to be created.

There is also the question of India’s attempt to create a variant of the 5G standard called 5Gi that is suitable for India’s unique conditions, with support for features like Low Mobility Large Cell (LMLC) that have been approved by the ITU.

What needs to come next?
Now that trials for 5G have kicked off for both sub-6 and mmWave bands, industry watchers can expect a lot of movement behind the scenes over the next six months, ranging from policy initiatives to updates from the telecom operators. We are hopeful of the following happening:

Fundamental policy reform. There are several areas that need urgent reform, starting with the policy regime that indexes spectrum reserve prices to past proceeds. Beyond spectrum pricing reform, there also needs be a clear roadmap of spectrum availability for the next decade.

The government has already indicated its desire to address shortcomings in its implementation of the Rights-of-Way (RoW) policy on a nationwide basis, which will be crucial to enable speedy and cost-effective deployment of digital infrastructure that will be crucial to 5G.

India also needs to look at enabling investments by enterprises for deploying private wireless networks, either through direct ownership of spectrum or through hybrid shared mechanisms.

A focus on broadband and digital infrastructure. India’s telcos are still heavily leveraged and capital starved.

However, there are palpable signs of recovery. Recent tariff hikes, while not dramatic, have been enough to boost ARPUs and make an impact on the bottom line. Beyond tariff hikes, there is an urgent need for a review and reform of taxation and other levies that are hampering the operations of India’s telcos. There must also be a major push on broadband connectivity, with investments in fiber to the home (FTTH) as well as a major push on Fixed Wireless Access (FWA).

Alongside this, policy makers must offer concrete incentives for the deployment of vital digital infrastructure that will be the cornerstone of a new economy.