Digging Deeper Podcast | 5G In India

With all that occupies prime time on our news these days – Kashmir, elections, Houston, Chandrayaan – one bit of important news slipped under the radar. Some days ago, telecom minister Ravi Shankar Prasad said the government’s auction of the 5G spectrum will be conducted this year-end or early next year.

This is significant because, well, 5G is being seriously touted as an absolute game changer. Many reports extolled the virtues of 5G – far higher data speeds that would propel Internet of Things, which would then transform as agriculture, manufacturing, healthcare, education etc. Some have claimed 5G will create a cumulative nomic impact of $1 trillion in India by 2035. According to a report from the 5G High Level Forum, set up by the government in September 2017, 5G’s value for India may be even higher than in advanced countries because of the lower levels of investments in physical infrastructure.

Remember the self-driving bus stunt during the winter olympics in South Korea in February 2018? That will apparently have to wait in India because, well, 5G could come to India rather slowly.

Back in June, the Department of Telecom outlined plans to hold the next spectrum sale first since 2016 by December 2019. This sets the time table back by a few months. There are other factors too – the Huawei angle, as well as the lack of interest from Indian mobile operators in 5G on account of forbidding costs.

In this episode of Digging Deeper, we’re taking at India’s preparations towards adopting 5G.

What is 5G?

Simply put, 5G will be much faster than the 4G LTE we’re used to now. Mobile operators in the US and UK say the average speed could be around 80-100 Mbps, so you should get internet speeds not too different from the average high speed broadband in our homes. Even by govt estimates, peak network data speeds are expected to be between  2-20 Gigabit per second or Gbps. 4G speeds in India  average 6-7 Mbps as against 25 Mbps in advanced countries. That’s right, 5G will bring serious speeds even to India. Our mobile phone addictions are about to get much worse. On the upside, along with faster Netflix speeds, there will be more cat videos and Tik Tok madness for everyone.

However, 5G rollout for India’s 600 million mobile phone users could take a while. In June, The Hindu reported, “While some countries such as South Korea and the US have begun rolling out commercial 5G services, India is yet to begin trials for these even as the government is targeting 2020 as the launch year for 5G in the country.” Those trials were scheduled to start in September. According to a report in Hindustan Times, “IT Minister Ravi Shankar Prasad, spectrum auctions will be held in this calendar year and the trials for 5G services with radiowaves allotted by the ministry will commence in the next 100 day. This does not sound very promising, if we look at how the things are currently moving.”

The report claimed 5G technology may take another 5-6 years, at a minimum, to reach the phone users in India! The reason: India may be targeting 2020 for 5G rollout, but it is yet to allocate 5G spectrum to operators even for 5G trial of use cases. 5G trials are only slowly picking up, with Ericsson, Nokia, Intel and Huawei aiming to invest in 5G test beds in India.

Also, a 5G ecosystem, which involves original equipment manufacturers (OEMs), infrastructure, spectrum, and edge devices is currently missing and, in such a scenario, 5G-enabled devices become more or less redundant for users in India. Fully exploiting 5G requires a new network topology, including new elements like edge computing, core network slicing, and radio network densification. As of now, South Korea, China, Japan, Australia and the United States are leading with 5G large-scale mass deployment.

Neil Shah, Research Director at Counterpoint Research, told HT, “We expect 5G to reach mainstream in India in 2023 and mass market starting 2025…This will, however, be much earlier compared to 3G and 4G era which took at least seven to eight years in India since the first global commercialisation for each generation of tech curves.” He added, “The dynamics are completely different now. We have a mature user base, perfect number of operators (three-four) and undergoing digital transformation at the right time beyond smartphones”

In comparison, 5G is more or less ready to roll out in advanced countries. According to the International Data Corporation, commercial 5G deployment is underway in many regions. 2019 is an introductory year at best while 2020 looks to be the year 5G begins to really kick in. IDC estimates that 5G shipments could reach 8.9% of smartphones shipped in 2020, or 123.5 million devices that will hit the market. That number is expected to grow to 28.1% of worldwide smartphone shipments by 2023. And businesses are lining up to exploit 5G. According to a Gartner report, well over 60% of organisations surveyed planned to deploy 5G by 2020. Those companies are betting big on Internet of Things-based communications and video analytics/streaming. That said, they’re also wary of the challenges service providers face in getting 5G networks ready by then.

India and 5G

India has to overcome more than one challenge before it can go full 5G, but the indications are that it will happen soon enough. Sunil Mittal, EVP, and CSMO, CSS Corp, told Financial Express, “India’s telecom infrastructure would need significant capital investment to herald in 5G adoption. Technological advancements in autonomous vehicles, augmented reality, and AI will continue to push the adoption of 5G in India…flagship government programs like Digital India and Smart Cities will also necessitate 5G connectivity for its more advanced programs. 5G connectivity requires 5G ready handsets which and it will be at least a couple of years by when the general population of India will start using them, as and when the demand for an immersive mobile experience rises.”

Mittal strikes a somewhat optimistic note. But what is the govt doing to speed up the process? Anshu Prakash, chairperson of the Digital Communications Commission, a body comprising officials from the departments of telecommunications, electronics and IT, said a few days ago, “By (the) end of this year or by January, we should have the auction…We have already started the process of deciding who will conduct the auction. The request for proposal is done, inter-ministerial committees are happening, hopefully very soon we will decide who the auctioneer is and in parallel, we take all these other decisions such as what the reserve prices are. We will take a call on it.”

And this auction is a long time coming. According to a report in Mint, the centre did not auction any spectrum in FY18 and FY19. In fiscal year 2016-17, the union govt had raised 65,789 crore rupees through the sale of spectrum, a fraction of the 5.63 lakh crore worth of spectrum, at base price, it had offered for sale. While the total spectrum put up for sale was 2,354.44MHz across seven bands, the government managed to auction just 965MHz. In all, around 59% remained unsold, leading to significant unrealised potential. Taking all the six auctions held since 2010, only about 60% spectrum has been sold.

The Telecom Regulatory Authority of India (or TRAI) had sent the govt its suggestions on 5G in August 2018. TRAI priced the 3,300-3,600 MHz band, which is expected to become the primary band for 5G, at 492 crore rupees per megahertz. However, mobile provider Airtel claimed the prices were exorbitant and declared it would not participate in any auction involving such pricing. Airtel is not without grounds for such a protest. In South Korea, the same band was priced at approximately 131 crores per megahertz in the auction held in June 2018. TRAI refused to budge and forwarded its spectrum pricing proposal once more in July this year after the Digital Communications Commission sought a comprehensive review of the regulatory body’s recommendations. The government’s call to review came with the aim of ensuring greater competition, sale of all spectrum on offer, and bringing the benefits of 5G to social sectors.

A quick look at the mobile sector in India.The disruption in India’s mobile market is now part of business lore. Jio’s entry in September 2016 brought data prices down to rock bottom and made voice calls free. This forced other operators to match tariffs. Many mobile operators shut shop or were acquired by bigger players. Now, Bharti Airtel and Vodafone Idea remain to compete with Jio. So one can understand Airtel’s hesitation regarding what it sees as further misadventures.

And they’re not alone.  Broadband India Forum President T.V. Ramachandran said last week, “Quantum of 5G spectrum on auction inadequate and at a very high reserve price. The current reserve price of 5G spectrum is too high – approximately 5 to 6 times higher than other countries and needs urgent revision. The unsold mobile spectrum has cost India Rs 5.4 lakh crore in an economic loss since 2010. Forty per cent of spectrum since the 2010 auctions has remained unsold…The current reserve price of 5G spectrum is too high – about 4 times higher than other countries when compared on ARPU (average revenue per user) adjusted cost per MHz and needs urgent revision.”

Comparing India’s situation with other nations, he said, “Many developed nations across the world have assigned spectral resources far in excess of the quantum that is available to Indian operators. India has 185 MHz of spectrum, much far behind 370 MHz in the United States, 296 MHz in France and 260 MHz in China.”

The Huawei issue

Then there is the tussle between the govt and the biggest name in 5G, Huawei. Media reports yesterday claimed that communication hardware manufacturer Huawei seemed to be getting impatient with regulatory bodies in India. The company has stated it won’t be investing more capital in its Indian operations if denied approval for 5G equipment in India. Huawei’s CEO in India, Jay Chen said the company has made several attempts to get clearances on rolling out 5G infrastructure with government bodies but received no official response. He lamented, “You cannot always think, think and think, but make no decision.”

To put it bluntly, the Huawei issue is one of confidence. Or a lack thereof. Huawei has been facing several regulatory roadblocks related to issues of privacy and data theft after reports claimed the company embedded snooping software in the source code of its servers. According to Entrackr.com, “The steering committee overseeing 5G is looking into Chinese participation in the launch of 5G services in India. The committee had given the go-ahead to Indian telecom operators for their respective 5G trail with an exception for Chinese vendors. In a meeting held in June earlier this year committee head, K Vijay Raghavan said that the matter is under deliberation regarding ‘the pros and cons of working with Chinese vendors’”.

Huawei has invested about $3.5 billion in India and operates a manufacturing unit in Chennai for production of telecom equipment for 2G, 3G and 4G. While it has appreciated the centre for their recent corporate reforms, including the substantial cut in corporate taxes, it is unsure about its expansion plans. Huawei claimed it is open to expansion into 5G equipment production and export, but that move depends on it being allowed to participate in the domestic operations of 5G network as well. Ritchie Peng, chief marketing officer with Huawei, said earlier this month, “European operators have said (in interviews to media) that without Huawei’s 5G technology, the 5G roll-out will be postponed by two to three years. We hold the same expectation for the India market, as we will use our fast 5G technology to meet the needs of Indian operators and consumers because now we shall focus on how we can use our best technology to serve their needs.”

Then there is the Donald Trump angle to Huawei’s story. The Chinese telecom equipment maker is battling intense pressure from the US, which is pushing allies to keep the company out of 5G telecom networks because of the suspicion that the Chinese government used the company for spying. Huawei has tried to dispel fears around Trump’s charges. Pen pointed out, “Around the world, Huawei has already secured more than 50 commercial 5G contracts, which shows that these customers from around the world believe that Huawei’s 5G is secure.”

Prabhu Ram, head- industry intelligence group, Cyber Media Research, pointed out how integral Huawei is to India’s telecom industry. He explained, “Huawei is a key player. Indian telcos are already working with them for 4G. If you take the company out of the supply chain now, it would potentially have cost implications, and could lead to a disruption in services. There could certainly be a delay in roll-out, though we cannot put an exact time on that.”

Meanwhile, Indian companies are attempting to test 5G. Reliance Jio on claimed recently that  it has joined hands with Chinese telecom operators and other international technology companies to develop 5G network solutions based on open standards and support interoperability.

Reliance Jio President Mathew Oommen said, “We are fast-tracking our efforts in 5G and Open technologies by developing and working with OTIC to accelerate the adoption of industry standard, interoperable O-RAN based deployments.”

Reliance claimed an impressive list of partners – China Mobile, China Telecom, China Unicom, Intel, Radisys, Samsung Electronics, Airspan, Baicells, CertusNet, Mavenir, Lenovo, Ruijie Network, Inspur, Sylincom, WindRiver, ArrayComm, and Chengdu NTS. It must be noted that Airtel, NTT Docomo, Softbank, SK Telecom, Singtel, Ericsson, Nokia and Qualcomm are also members of O-RAN, or open radio access network, but some players from that alliance have announced collaborations with the OTIC as well. So there seems to be some movement in 5G that could potentially fill the void in case Huawei chooses to exit.

So that’s where India’s preparations for 5G stand. Global telecom industry body GSMA expects India to have 920 million unique mobile subscribers by 2025, including 88 million 5G connections. It remains to be seen whether the govt can get its act together in time so we don’t miss the bus on 5G.―Money Control