Let the trials begin!

The 5G trials are expected to be held early March, and spectrum auction for 3.3 GHz-3.6 GHz bands in another six months. It has taken the government 30 months to reach to this stage. The policy requirements were finalised in the 5G High Level Forum Report released by DoT way back in August 2018 and sixteen applications for 5G field trials received in January 2020. On the other hand, 118 operators in 59 countries deployed their 5G network. 5G network now covers 7 percent of the world population, with the expectation that 20 percent shall be covered by 2025 and 1 billion 5G devices connected by 2023. China has deployed more than 5 lakh 5G base stations, covering around 7 percent of its population.

5G in India is now planned to be rolled out by the end of 2021. The launch of 5G services will depend on the availability of network equipment and device ecosystem. And it will not be rolled out pan-India, but in select areas where the demand would justify the CapEx. While the earliest applications will be in large metros on the bases of eMBB, which will give users better speeds and reliability, a user will not be able to distinguish between 4G and 5G speeds.

Both Jio and Airtel have claimed their end-to-end readiness to launch commercial 5G services in the country shortly after the availability of adequate spectrum. Airtel recently demonstrated live 5G services on its commercial 4G network in Hyderabad, using 1800 MHz band. Jio submitted that it has developed its own 5G technology, using 100 percent homegrown technologies, with no Chinese component and plans to offer it to other companies. This will be ready for launch in 2H21.

The trials are a mere starting point. They will kickstart the learning curve for all the stakeholders: The issues faced while implementing them, the terms and conditions and the type approvals that need to be included in the tender document, the challenges the technology poses, the extent of the fiberization of the towers in each location, nuances in investment and financial viability, the possibilities it brings for the industries and the consumer.

For the TSPs specifically, the lab and field trials will test factors such as interoperability, and an indigenous 5G infra based Open RAN ecosystem with the commercial 5G handsets. The trial is also critical to ascertain the interoperability of 5G infra with the existing 4G networks, serving as an underlay network for 5G services.

This technology seems to have got embroiled in a canvas much larger than any other
It has come to the forefront of an ongoing geopolitical and technological rivalry between China and the United States. Huawei is dominating the market and has become the leading supplier and manufacturer of this new technology. However, its close ties with the Beijing government, opaque ownership structure and past allegations of legal violations, has raised concerns that its equipment could be used for espionage and surveillance. The United States has taken a slew of measures to ban Huawei and is persuading its allies to follow suit. Beijing has hinted towards the use of reverse economic sanctions if Chinese companies are banned.

Against this backdrop, India’s decision on a supplier for 5G technology, equipment, and software is a crucial one. Cybersecurity risks and surveillance concerns are a major concern. Strategic concerns relate to the trade and technology war between the US and China. Tensions between the two countries have escalated, leading to the splintering of global cyberspace and technology into distinct spheres of influence. India will need to decide with which camp to align. The final aspect of economic considerations relates to the cost of the equipment, which is an important factor for developing developed countries since they have limited finances to spend on expensive 5G equipment.

The opinion of India’s largest mobile operators (Reliance Jio, Bharti Airtel and Vodafone Idea) can significantly influence the government’s decision on any future 5G policy. Pre-existing partnerships and economic rationales—such as low costs and better technology—will be crucial factors for Indian mobile operators when it comes to choosing a 5G supplier. Presently, India’s telecom service providers are under massive financial stress as they are facing high debts, low investments, and lack of revenues. This may severely incapacitate them from investing in new technology. Before the industry decides, however, it wants the government to take a definitive stand on the 5G question so that they can future-proof decisions.

A proposed way to offset security concerns is to boost indigenous development of the 5G technology—an important step given that India imports 90 percent of its telecom equipment. The government launched a three-year program for developing indigenous 5G test beds, with a budget authorization of ₹224.01 crore. Jio’s completely indigenous 5G solution, if it works on par with global standards could be a game changer.

Nonetheless, as appealing as a homegrown 5G solution would be, the push for indigenous development has been somewhat confounding. India is not a key player in technology design, development or the manufacturing of telecommunication equipment and is yet to establish an innovative and globally competitive industry propelled by public and private support, with tie-ins to research, academia and universities. As India, and the world, is likely to enter a protracted state of economic hardship—it is unclear if the government would be able to provide financial incentives and support to build an indigenous 5G industry.

There can be only two scenarios: one, where the powers that be allow Huawei to supply India’s 5G network, or another, where it bans Huawei and other Chinese vendors. The first scenario would have grand implications for India’s bilateral relations with China, as well as the United States. Given the frosty ties between the two nations, this decision would be surprising to the Indian polity as well as India’s allies. However, India’s established defense and security arrangements with the United States will receive a severe setback, and the potential for surveillance risks will remain. On the other hand, rejecting Huawei and joining Washington’s clarion call may seem to be a natural choice, given India’s growing bilateral relations with the US. However, doing so could possibly lead to worsening of Indo-China ties and further alienate India from its own neighborhood.

But these are not the only considerations for India; it needs to make a decision and policy framework independently and provide the flexibility to choose a secure, reliable, and affordable supplier to install this new technology. Given how indigenous development of the technology are a long way ahead, equipment costs and economic viability are perhaps the biggest factor for the Indian industry at the present moment.

In fact, Harsh V. Pant and Aarshi Tirkey, have written an entire book  The 5G Question and India’s Conundrum, on this subject.

It took the IT Parliamentary Committee report to pull the government out of its slumber
The Standing Committee on Information Technology (2020-21) with Shashi Tharoor as its chairman has been scathing in its Twenty-first Report on India‘s Preparedness for 5G. The Committee concluded that sufficient preparatory work had not been undertaken for launching of 5G services in India. As such, India has not moved beyond the modest beginning stage as compared to other countries in the world. The Committee‘s concern is enhanced by the fact that while 2G was deployed globally in 1991, it was deployed in India only in 1995; 3G was deployed globally in 1998 but deployed in India ten years later, in 2008. Similarly, 4G services were launched in India 7 years after their global launching in 2008.

It came across numerous issues and challenges that need to be addressed in war footing if the vision of 5G is to be achieved.

The Committee observed that the government are yet to take action on many of the recommendations of TRAI on issues which have direct bearing on 5G deployment. While expressing their displeasure over the laidback approach, they recommended that the DoT review all its policies related to 5G and fast-track action in areas which need concerted action. It has also asked the DoT to learn the process of rolling out 5G from other countries.

Decisions have not yet been made on identifying the spectrum bands and spectrum policy. Globally 5G network have been deployed in three bands—700 MHz, 3300-3600 MHz and mmWave band (26 GHz band and 28 GHz band). 700 MHz band had been auctioned in 2016 but had no takers, 3.3-3.6 GHz has not been auctioned yet, and the mmWave band has not yet been declared in India.

In the 300 MHz spectrum available in the 3.3-3.6 GHz band, scheduled to be auctioned around September 2021, 25 MHz is required for satellite purposes by Indian Space Research Organisation (ISRO), and the ministry of defence has expressed it needs 100 MHz, (the Defence has also made a further request to be allocated the entire band), leaving only 175 MHz for the telecom services.

Between four operators, the services require at least 3.5 GHz (100 MHz per operator), 200 MHz per operator in the mmWave band, 2×10 MHz per operator in each of the 600 MHz and 700 MHz bands, 2×1 GHz per operator in E-band and 1 GHz per operator in V-band.

That the spectrum tranche must be the right size from day one cannot be overemphasized. Both Randeep Singh Sekhon, Chief Technology Officer, Bharti Airtel Limited and Shyam Mardikar, Group CTO- Mobility, Reliance Jio have said this often enough. To quote, Seekhon, “The spectrum tranche has to be the right size, you can’t just start spectrum at a very small tranche and then expect 5G to give a great differential experience compared to 4G. A couple of operators have launched with a smaller tranche of spectrum. And 5G is a little like a false start. So customers don’t get a differential experience,” and Mardikar, “Getting the right amount of spectrum is imperative. Else it will be akin to building a one-lane highway, and then going back to add the second lane thereby jeopardising the first one too.”

Spectrum prices have yet to be decided. On TRAI’s recommended price of ₹492 crore per MHz in the 3.3 GHz-3.6 GHz band, 100 MHz will amount to ₹50,000 crore per operator, 3-70 times of the market-determined price of the spectrum in other countries in absolute terms and is 16 times of the price in the case of comparison in relative terms. Given the overarching impact of 5G across the sector, and the monthly ARPU of sub ₹165, revenue expectation of the government must be contained.

The Committee observed that there are fundamental differences between the versions of TSPs and TRAI on fixing of spectrum price in the country and there is a need to review the spectrum pricing policy in the country, and there is a need to revisit the nuances of spectrum pricing in other countries and adopt the best practices. And the DoT/TRAI should come out with a convincing spectrum pricing policy that is sustainable, affordable and acceptable to all, focusing on consumer interest and socio economic goals of our country. And concerns raised by COAI for rationalization of levies and duties on the telecom sector should also be given time bound consideration by the Government, so that financial burden neither acts as a deterrent for TSPs in their move towards 5G nor places an unsustainable burden on the Indian customers.

The Committee noted with concern that even though Use Cases have been developed around the world, in India no sufficient Use Cases have been developed so far for successful implementation of 5G in India. The present status indicates that India is far behind countries like China in term of development of 5G. This will undoubtedly have an adverse impact on rolling out of 5G, considering that development of sufficient Use Case labs is required for successful implementation of 5G. The Committee recommended, the Department focus on development of Use Cases by providing suitable incentives and support and Use Case labs which are currently under development should be expedited. The Committee also recommend that the Broadband Readiness Index Report for the year 2019-20, which is under preparation should also be finalized at the earliest.

Though the Department submitted that there are no major issues confronting trials in the country, COAI flagged a number of issues relating to trial spectrum. These include, license for trial spectrum should be for minimum one year, flexibility to conduct trial in any city/location within the circle as per allocated trial spectrum, single window clearance for the trial license, no equipment/application vendor restriction for conducting lab trial, and import duty waiver in 5G trial equipment. TSPs also echoed the same sentiment during evidence that for proper commercial 5G roll outs to take place by 2022, there is an urgent need to initiate the trials now and start to build the ecosystem.

The Committee found that the objective of TSDSI RIT to enhance rural coverage is a worthy initiative; however, the concerns to replace the globally harmonised 3GPP standards with the TSDSI RIT standards being proposed for 5G that are not globally harmonized and also have gaps around Interoperability, Performance, Implementation, Alignment, and IPR in the proposed specifications need to be considered before taking the final decision in adopting standards.

Other key issues as a taking suitable policy measures for promotion of Open RAN in the telecom sector; issues relating to RoW permissions, necessary steps to increase India‘s fibre footprint, ensuring an ecosystem for 5G smartphones, sharing of infrastructure, and availability of reliable power supply have also been brought to the forefront.

Challenges in implementation
There exist inherent implementation challenges, that need to be addressed. Deloitte has highlighted a few key ones.

Although, new RoW rules and standardized processes with applicable charges were introduced in the year 2016, however, roadblocks have hampered implementation particularly in rolling-out Optical Fibre Cables (OFC) and telecom towers.

A strong backhaul network is a key requirement. India has about 1.5 million kms of fiber deployed with less than 25 percent of the telecom sites connected through fiber. However, enabling broadband networks through fibre implementation could be a long capital intensive project and will require an estimated investment of USD 8 billion to increase fibre footprint and reach 77-80 percent of tower assets in key urban areas. Moreover, while BharatNet had its own set of challenges during implementation, government is still striving for rural broadband connectivity. It is imperative that these efforts are expedited to build the requisite backhaul infrastructure required for 5G. Furthermore, cost effective solutions such as E-band and V-band based microwave backhauling – permitted worldwide for ultra-high capacity gigabit backhauling, is yet to be introduced in India.

Currently, the industry has ~471,000 towers across the country. Since, India is set to witness a multi-fold increase in data consumption, the industry is expecting to foresee at least 100,000 more towers with an approx. investment of USD 2.78 billion in the near future to stride toward Digital India initiative and sheltering possibilities for deployment of new technologies including 5G, and IoT.

While the investment for 5G would grow incrementally as advancements on existing 4G/LTE technology, with 5G spectrum and network densification needs, it is anticipated that industry might require an additional investment of USD 60 to 70 billion to seamlessly implement 5G networks. In midst of such rising debt levels and market consolidation activity, the telcos are seen to be constrained on capital expenditure.

Small cell based network densification is yet to be realized at a significant scale using 4G network backhaul. With current 4G network coverage, building commercial 5G Use Cases over 4G networks may pose a challenge in the near term.

The rise of new business architecture evolving through 5G networks are likely to present new challenges to security and privacy protection. Policy framework needs to be implemented well in advance to secure drive the connected ecosystem evolving in lieu of 5G.

Being the devil’s advocate
Today, Indian telecom is in a flux. Look at Tata, Uninor, Aircel, RCOM and MTS. Even Bharti Airtel, Vodafone, Idea Cellular and BSNL… Everyone saw 3G as the messiah that would save the day. On an average, Tata, RCom, Airtel, Vodafone and Idea Cellular invested over ₹10,000 crore each on 3G spectrum and network rollouts (more closer to ₹15,000 crore each) to launch 3G mobile services. None have even seen close to that number in revenues in 3G over a decade, individually.

In just 3G, the telecom industry had a massive exposure of nearly ₹150,000 crore in extended debt. Recently, the State Bank of India and two other banks have lashed out against three Reliance Group entities—Reliance Communications, Reliance Infratel and Reliance Telecom. But years back, fearing just such a scenario, the Reserve Bank of India and a consortium of bankers had sent out an SOS to the Government, suggesting a moratorium or instalment payments for telecom companies in the matter of payment of AGR dues. That clarion call was ignored. With the result that more than half the operators are gone, and the remaining are up to their necks in debt. And the banks are panicking.

₹50,000 crore is what each telco will have to pitch in for 5G spectrum alone, forget the network rollouts. Who has the money, when they are all broke? And what speeds will they offer us—100 Mbps? We get faster speeds sitting at home today. Work and study from home on Wi-Fi networks are now the norm and shall remain so for more than a while. And what for? Netflix and Amazon Prime are working. So are Hotstar and SonyLiv.

Having said that, the country cannot be denied the opportunities that 5G technologies will offer in infrastructure inefficiencies for too long. Vehicle platooning, use of robotics for precision manufacturing, better logistics to track goods from raw materials to product delivery, improvement of the entire value-chain in agriculture, smart grids and smart metering in the energy sector, and more effective tele-medicine delivery are only a few.

A premium service could be offered to the discerning customers, and once the devices become more affordable, and the Use Cases are in place, it could percolate to other consumers.
In fact, the Ericsson ConsumerLab findings suggest that based on a global population, half of the consumers are willing to pay a price premium of around 20 percent, when moving from a 4G to a 5G subscription if more value is provided in the package.

India cannot be afford to be left behind on an international business platform, which it will, if 5G services are not made available.