Entry of Big Tech in 5G captive network seems imminent

The communications ministry, headed by Ashwini Vaishnaw has sent recommendations to the Union Cabinet, favouring the entry of Big Tech including Google, Amazon, TCS and Cisco in building captive 5G networks for businesses and enterprises.

“Enterprises setting up private captive networks may obtain the spectrum directly from the DoT and establish their own isolated network,” says the note from the communications ministry for the Union Cabinet. The move is in line with the original recommendations given out by regulator TRAI that had first suggested the entry of technology firms into the captive 5G space for businesses, in line with similar practices across many nations.

The note says that while private tech companies would be allowed to set up the captive networks, the same would also be open for traditional telecom companies who will continue to have rights of being in the business too.

The Telecom Regulatory Authority of India had recommended that private enterprises directly obtain 5G spectrum from the government and establish their own captive wireless private networks. It has also recommended a ‘light touch online portal-based regime’ to acquire permissions/licences for setting up such networks. Private enterprises, TRAI has also suggested, should have the option of leasing spectrum from telcos to set up their own captive 5G networks.

The telcos, Bharti Airtel, Reliance Jio Infocomm and Vodafone Idea have vehemently appealed that if private networks go ‘direct’, it would shrink their own revenues by 40% or so, destroying the 5G business case altogether. Telecom service providers have, and will going forward, invest lakhs of crores of rupees in network rollouts. Enterprise services constitute 30-40% of the industry’s overall revenues. Private networks once again disincentivize the telecom industry to invest in networks and continue paying high levies and taxes.

The cumulative revenue of private LTE (4G)/5G networks is expected to grow to $9 billion between 2020 and 2025 globally, excluding spending on spectrum, devices, and applications. This underlines the revenue opportunity, say analysts. The number of private LTE/5G networks will grow to 14,000 in 2025 from around 500 in 2020, according to a report by Analysys Mason.

CT Bureau