One of the best repeated examples of India’s ability to leapfrog technology in its growth was how the country took to mobile phones vis-à-vis landlines. The fast growth of mobile phone usage and its penetration was an anchor statistic in many a powerpoint presentation and it was used to justify many a corporate strategy, more so in the digital world.
No one can deny the benefits. With Bhim, a government payments app, mobile phones have made banking accessible and inexpensive. Accessing and receiving government notices like vehicle registration receipts or evening entertainment content has become easy, thanks to mobile services. FaceTime or Skype meetings save travel costs and so on. By any calculation, the cost saved by using mobile services, after paying for them, will be several multiples of the current losses and liabilities of the telecom companies.
It is for that reason alone, in its ability to eventually guarantee an extremely high ROI (return on investment), it is important for telecom services to be profitable and therefore, be able to invest to take advantage of the latest technology. Though use cases of ultra high-speed 5G technology are still evolving, it is already finding use in healthcare, where complex robotised operations can be performed remotely or in high-quality video streaming applications in the entertainment sector. If Indian telecom operators are in no position to invest in new advanced networks, the result will start showing in the next few years as the country will lose its digital advantage to emerging players.
What’s the problem? The next generation in telecom technology is 5G, which promises true high-speed mobile data delivery, 100 times faster than the current 4G technology. But, for 5G towers to transmit terabytes of data to thousands of mobiles users connected to them at a given moment, they must have a backhaul to carry the data users need. For that the towers must be connected to each other in a criss-crossed optic fibre network, as even in 5G just the wireless technology cannot alone manage all the data throughput efficiently. It’s for that reason Reliance Jio wants to connect every home with JioFiber, as for really high-speed data, wireline is still super efficient.
Fiberising towers is an expensive affair. It requires digging up trenches across each city and town in the country and connecting the towers with optic fibre cables. The actual cost of digging a kilometre and laying optic fibre cables, which companies like Sterlite Optical do, is not expensive—it costs about Rs. 6 lakh-Rs. 10 lakh. But, companies will have to pay an additional right of way (ROW) to municipalities and city governments, which costs up to Rs. 1 crore per kilometre in high mobile markets like Mumbai.
Currently, an estimated 35% of the towers in the country are fiberised and even in the metros there are pockets which still need to be done. That is one of the explanations why data speeds across even a small patch of area vary a lot. In a square kilometre, one tower may be fiberised, while another may not be. At current costs, tower fiberisation can alone cost companies Rs. 40,000 crore as they have already done the easy locations and to guarantee a ubiquitous service, they have to ensure even the towers that are further away are modernised.
Already, the government has postponed the testing phase of 5G by a year, as several formalities including test spectrum and certifying equipment vendors were delayed. That coupled with the inability to invest in both fiberisation and new radio and software for 5G threatens to slow down the pace of technology advancement in the sector.
What can be the social or economic cost of such a delay? Though India took to mobile telephony quickly, the unavailability of the latest generations of later generations, especially 3G and later 4G, developed several businesses slowly. Even large companies—Airtel, Vodafone and Idea expanded their 3G and 4G networks slowly and the economic loss that caused was quickly visible when Jio launched the latest generation services. For phones, the smartphone market boomed in the country. Apple became a $3-billion business, while Netflix recently announced that it has made a small profit in India. In fact, despite the economy slowing down on the broader front, I will wager a bit that there has been mini-boom of sorts thanks to the rapid growth of several businesses, because of the advance in advance in telecom services, especially availability of 4G.
Therefore, the decision to resolve the telecom tangle, should not just focus on what the government will lose immediately but the loss to the economy that will accrue from not being at the top of the digital game. It is increasingly become evident that digital services will be the employers of the future and with a huge young population, a short-sighted decision can stymie the growth of our economy in the near term.―Fortune India