Taking the 5G leap
We are standing at the brink of 2020, looking ahead to take the leap into a more advanced future, powered by 5G. With live demos already happening and creation of numerous use cases, the world is waiting to see imaginations come alive. But as they say Rome was not built in a day, it took years to reach where we are today, bringing in new technology with every generation. Telecommunication, in its most rudimentary form, has been existent since as early as the 1700s when smoke and drums were used to send signals. In 1800s electrical communication systems came into being and there has never been looking back. Today, we are talking about digital media distribution and virtual reality as the next big thing.
Telecom equipment has been at the core of not just facilitating communications but the development of the society itself, which drove the growth of the equipment industry over the years. The global telecom equipment market is expected to reach approximately USD 562 billion by the end of 2023 with approximately 10 percent CAGR during the forecasted period 2017–2023.
The telecom industry today is primarily comprised of telecom service providers, telecom equipment manufacturers and suppliers, and passive infrastructure providers. Telecom equipment can be further classified into consumer-end equipment, wherein major products include cell phones, chipsets, wireless and landline infrastructure equipment, digital subscriber-line (DSL) and cable modems, and networking devices, such as routers and switches. The industry’s customer base is highly diversified, including multi-national corporations, telephone companies, governments, universities, institutions, commercial businesses, and consumers. The industry being very capital-intensive, a significant amount of investment is required in hardware and R&D.
Current state of Indian telecom equipment industry
Over the last decade, Indian telecom industry has witnessed an extensive growth in subscriber base (subscriber base reached 1183.77 million as of April 2019), making India the second-largest telecommunications market with overall tele-density at 90.05 as of Apr’19. The telecom services and passive infra sector thus have shown a robust growth reflected by phenomenal increase in number of subscribers, revenues of service providers, and coverage of telecom services up to the remote corners of the country.
Global telecom equipment market also forecasts a very strong growth momentum. India may be a small fraction of this, nevertheless, a significant one. The Indian telecom equipment market is expected to reach USD 37 billion by 2020. The wireless equipment demand is expected to grow at 12.6 percent, primarily driven by newer technology equipment. Broadband equipment market demand is expected to grow by 10 percent to reach USD 10 billion by 2020.
Year after year, India is meeting around 90 percent of its robust demand for telecom equipment through imports. While a liberal trade policy enabling import of telecom equipment, with low or no duty, has kept both service providers and consumers happy, the limited capacity-building for domestic production poses a serious challenge.
However, in January 2011, National Policy on Electronics had set a vision to promote India as a telecom equipment hub by promoting domestic manufacturers. The industry has also worked hand in hand with this vision of the government.
Government’s Digital India initiative is another significant step toward development and will help in digital infrastructure development. The telecom industry is the key enabler as India heads toward becoming a digital economy, and it will only accelerate with the launch of 5G. Nokia has been at the fore-front of the launch of latest technologies in India. Under our social commitment, we are also developing clusters of digitally integrated villages for socio-economic development.
For every vision to become a success, the key today is greater collaboration amongst the players and consensus with the government and regulatory frameworks. There is a renewed prioritization by the government on expanding the local design and manufacturing capabilities in India. Nokia is already manufacturing the entire gamut of telecommunication equipment from its Chennai factory that ships 50 percent of its output to global markets. It recently became the first factory in India to produce 5G gear. Nokia has also implemented the first real-world smart manufacturing application of Industry 4.0 in India, leveraging solutions such as augmented and virtual reality (AR/VR), connected robotics, artificial intelligence, big data analytics, and Internet of Things to enhance operations and increase productivity. Nokia’s Chennai factory is the first to manufacture 5G New Radio (NR), based on the 3GPP 5G New Radio Release 15 standard in India.
Telecom Minister Ravi Shankar Prasad said that India is on its way to become a global power with the march toward technology, and has asked the industry to focus on innovation around 5G technology to create products with India-specific patents. This vision to roll out 5G successfully will only happen with concerted efforts of everyone in the industry. The key is collaboration and the government’s role would be to facilitate the same for faster adoption.
While we look ahead to advancements in not just technology but in our daily lives with the coming of 5G, challenges will also be a part and parcel of the story. These changes will not only expose us to new prospects, but these advances are tempered by the need for ever-stronger security. Security needs to be addressed separately and comprehensively as it will lay the building block of trust and reliability for any service provider. With local innovation and manufacturing, security concerns are higher and thus need to be taken up with greater responsibility.
The global competition in manufacturing equipment is fierce. With greater investments and skilled labor force, the developed countries offer higher scalability. This would be a challenge for the Indian manufacturers to look ahead to. The government can incentivize manufacturing via lower duties and special credits to cover the current targets. A sound infrastructure, including the reach of fiber and conducive environment, will be the key to implement the 5G vision in India. India can easily serve the manpower requirement of such large-scale employment, but skill enhancement will be necessary to compete with the global manufacturers. Knowledge sharing and greater R&D will help us move neck to neck with competitors.
All these policy frameworks focus on developing a more robust ecosystem. The key would be the implementation of the same in a predictable and time-bound manner. The epicenter of transformation will be the convergence among various ministries of the government, financial institutions, and industry players. Design policies that are more transparent and feasible to implement will give the required nudge to stakeholders. The need of the hour is to assess potential issues faced by all types of stakeholders, be it manufacturers, operators, or consumers. The extensive growth in subscriber base, coupled with planned introduction of 5G technology in 2020, will provide a major boost to telecom equipment Industry in the near future. India is positioned as a synchronized participant in design, development, manufacturing of 5G technologies, and products. It’s not a distant future anymore where smart will be the new normal for all of us. It is right here and we are ready to take the leap!