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Prashant Tarwadi
Director, Corporate Ratings & GIG
India Ratings & Research (Fitch Group)

Does India need 5G?

India Ratings and Research (Ind-Ra) estimates India’s total wireless data usage to reach 13 exabytes/month by 2025 (5× of 1Q18 data usage). The existing technology is inadequate to meet such high data demand; therefore, a judicious mix of fiberization and 5G roll-out will be required. However, India can formulate its own customized 5G or 4G+ technology than adopting global standards for 5G in toto to focus on improving user experience or cater to evolving enterprise requirement, while avoiding critical applications requiring ultra-low latency. From the network infrastructure perspective, hotspot devices with 3G/4G compatibility will take precedence over handsets in 5G deployment. Also, Indian telcos need to adopt similar technology to optimally utilize and share the available infrastructure, making 5G a financially viable option. However, few questions left unanswered include 5G challenge on net neutrality as some use cases are prioritized, feasibility of 5G for end-users, and payment ambiguity for 5G (telcos or end-users).

Why does India need 5G? India’s wireless data usage is likely to increase by 2025, led by rising penetration of smartphones, availability of high-speed internet at affordable tariffs, and shift in media viewership to online platforms from traditional medium. Fiberization, along with complementary high-speed 5G wireless technology, would be required can be used as last-mile connectivity for fiber roll-out. Also, aggregating existing unlicensed spectrum (Wi-Fi) with 5G spectrum rollout can lead to an increase in data speed.

Should India adopt global standards for 5G? Globally, 5G is seen as a key enabler for virtual-reality applications and Internet of Things (IoT). While existing technologies (up to 4G) focus on connecting mobile devices, especially smartphones, 5G aims to bring connectivity to an array of devices such as television, computers, household appliances, and factory machinery. New use cases will inevitably continue to rise; hence, India can formulate its own customized 5G, which can focus on applications to improve user experience (high-definition media, multi-person video call, and the like) or evolving enterprise requirement (smart city, cloud-based enterprise solutions, rural integration, data warehouses, and so on) than adopting global 5G technology standards. India can avoid critical applications, which require ultra-low latency and extremely high reliability (virtual reality, remote surgery, automatic vehicle control), as it would be challenging to make an economic case to invest in developing such ecosystem.

What should be the roll-out strategy? Ind-Ra believes hotspot devices will take precedence over 5G handsets (4G LTE-compatible), as operators would assess demand for 5G applications before committing CapEx for commercial manufacturing of handsets. The initial use cases will focus on improving user experience and gradually percolate to enterprise requirement. However, every use case will be vastly different in terms of data speed and latency requirement, and hence would require different modeling. This could be a major deterrent to wide-scale adoption of 5G in India.

What are the key considerations for network infrastructure? Technology or specification for 5G network infrastructure is yet to be finalized, with several vendors testing various technologies. The biggest challenge for developing a 5G-compatible infrastructure is that it should support heterogeneous networks, which have significantly different speed and latency requirements. Also, the computing/processing of data is likely to shift to the edges (handsets) than in core network, which would require technological upgradation at device level.

Ind-Ra believes industry participants need to adopt same technology to optimally utilize and share the available infrastructure. This would optimize CapEx and provide clarity on financial viability of the 5G rollout, which is of utmost importance for the debt-ridden Indian telecom sector. This would require unprecedented cooperation among operators to standardize the technology and share infrastructure to make 5G a viable option. The government will also have to play a crucial role in ensuring optimal pricing and availability for 5G spectrum and right-of-way by allowing installation of smaller cell-sites on light-posts, fly-overs, and other government-owned properties.

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