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IAFI recommends Pricing Methodology for private 5G networks based on recent auctions

5G News In India

ITU-APT Foundation of India (IAFI), has called upon the Telecom Regulator TRAI to consider IAFI spectrum allocation and pricing methodology while framing its recommendations to the government to prepare a policy framework for the allocation of dedicated spectrum for captive industrial and enterprise 4G/5G networks.

While appreciating the TRAI’s well-thought-out recommendations and the option of enterprises to obtain the spectrum directly from DoT for establishing their own isolated Captive Wireless Private Networks that pave the way for the development of Industry 4.0 infrastructure in the country, IAFI has recommended that the same market-determined price as identified in the Spectrum auctions of 2022 may be applied to CNPN networks as well, based on the coverage area of the CNPN networks. This will provide a fair and unbiased way for determining the actual spectrum price to be paid by the CNPN Licensees.

In the recently concluded spectrum auction, DoT (Department of Telecommunications) has already found the market-determined price for both mid-band as well as mmWave spectrum bands. This is the price at which the spectrum was bought by Mobile network operators for their 5G network rollouts. The Unified Access Service licenses of these Mobile network operators permit them to cover any of the licensed service area (LSA) with the respective spectrum for public networks and provide services as stipulated in the licensing conditions. If we exclude the forest and unproductive lands in different LSAs, nearly 70 percent of the geographical area is a potential for any public mobile network operator for which the operator deploys his network coverage with respective spectrums.

Explaining the rationale behind this proposal, Mr. Bharat Bhatia, President IAFI also provided an example calculation of spectrum price for a Captive 5G network to be paid by the private licensees for setting up a network that covers a 10 Sq. Km area network area for 10 MHz block of spectrum:

India has vast presence of Industries across various sectors ranging from Manufacturing, Transportation, Mining, Land & Sea Ports, Automotive, Steel, Pharma, Education, where true potential of private networks can be exploited to drive “Make in India” initiative and eventually contributing to the national GDP. Thus, direct spectrum allocation and licensing of captive Industrial and enterprise 5G networks is in the overall national interest of all sectors of the economy.

A recent Mckinsey report had estimated by that by 2030, the business value resulting from manufacturing 5G use cases running on improved connectivity especially with the use of ultrafast 5G technology could generate from $400 billion to $650 billion of GDP impact (see report). That’s because the enhanced bandwidth, higher speed, significantly lesser latency, improved security and device density that high band 5G connectivity and private networks bring, can support manufacturing automation and numerous high-impact applications to achieve higher operational efficiencies. Apart from manufacturing, many other industries / sectors are also looking at 5G as the backbone for their equivalent of the Fourth Industrial Revolution.

It is also pertinent to mention that the enterprise connectivity would require utmost customer centric approach where network’s reliability, speed, latency, efficiency, density each need to be defined by the Enterprises and can vary for each Enterprises depending on their operational requirement. For example, 5G network for a manufacturing plant with large assembly line would be completely different from the one being used by an educational institution for R& D. It would immensely be difficult for a Telecom service provider to customize its network for each Enterprises and fulfil the desired network with specific values of different connectivity parameters of such enterprises.

Several Regulators, particularly those in the developed countries around the world have already realized the importance of captive private 5G communications by their industries and enterprises and have been proactively working towards making the necessary spectrum resources available directly for their captive needs, keeping in mind importance of these users in nation building and economic growth. Internationally, there were 955 private mobile networks by November 2022 in 72 countries, led by the US, China and Germany.

Manufacturing, education and mining are the leading user sectors and 5G is used by 41 percent of these networks. Many Countries are already implementing rules and have started allocating spectrum directly for the vertical markets/private broadband/local area licensing. In fact, most industrial countries have already allocated mid band spectrum for deployment of private 5G Networks.

India too, could consider the popular mid-band and mmWave category as typical frequency spectrums for 5G private networks. We are happy to note that the TRAI has already recommended few such frequency bands for direct allocation to enterprises and industry verticals for captive non-public networks in India.

IAFI has also called upon the Government to reserve adequate spectrum for direct allocation basis for deployment of Private 4G/5G (Non-public as well as Captive) networks to the Enterprises based on globally harmonized IMT technologies in standardized 3GPP frequency bands soon.

CT Bureau

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