Slow, unsteady and losing the 5G race
India is expected to be at least 3 years behind other major nations in deployment of 5G technology due to factors like tough spectrum acquisition norms, mobile handset ecosystem, poor financial health of telcos and inadequate infrastructure.
Data hungry Indian customers are eagerly waiting for the 5G boost, which will give them 50-100 times higher speeds than the existing 4G networks. Moreover, 5G would usher in the internet of things era, connecting homes, cars, machines, gadgets etc.
However, India’s progression towards 5G technology mirrors the lackadaisical approach that had plague adoption of 3G and 4G. 5G technology will take at least late 2020 to come to India according to government projections. But industry experts feel that the country could be at least 3 years late in rolling out 5G networks compared to nations like US, China, France, Germany, South Korea, Japan and Australia which could roll out the technology by late 2019 or early 2020.
Firstly the infrastructure is far from ready. Not even 20% of India’s telecom towers are connected by fibre. At least 70-80% of the towers need to be connected via 5G to support speeds of 10 Gbps for applications like video-on-demand, smart cities and internet of things (IoT). China has already connected 75-80% of its towers by fibre. It is also far advanced in terms of developing data rich 5G content and developing an internet of things (IoT) ecosystem.
The second major issue is the dismal financial status of telecom companies in India, which are carrying a debt burden of around Rs 7 lakh crore. Firms like Bharti Airtel and Vodafone Idea are already in losses, and setting up and maintaining 5G infrastructure in small towns and villages could be an expensive proposition at this stage. Bharti Airtel has already affirmed that it is in no hurry to bid for 5G spectrum and sees a horizon of 4 years for deployment.
The stark contrast between these players and Reliance Jio was evident when Airtel Chairman Sunil Bharti Mittal and Reliance Industries Chairman Mukesh Ambani attended the Indian Mobile Congress 2018 in October. Mittal lamented on the disorderly consolidation of the telecom sector that had wiped out US$ 50 billion in value and also the heavy taxes on telecom companies. On the other hand, Mukesh commented, “By 2020, I believe that India will be a fully-4G country and ready for 5G ahead of others.”
Moreover, Rajan Mathews, director general of the Cellular Operators Association of India, which represents Vodafone Idea, Bharti Airtel and Reliance Jio Infocomm, says that the reserve price for spectrum in India is much higher than countries like Germany, South Korea or UK. Telecom Regulatory Authority of India (Trai) had set a minimum reserve price of Rs 492 crore per unit for 5G spectrum (in the 3.4-3.5 GHz bands), compared to while South Korea and UK that have set Rs 131 crore per unit and Rs 66 crore per unit respectively.
Lastly, India still doesn’t have a mobile handset manufacturing ecosystem that meets global benchmarks despite ramp up in manufacturing capacity over the last few years. A report by Frost and Sullivan in June 2018 quoted, “Except Samsung, all other mobile phone manufacturing units in India are low value-add assembly units. The lack of indigenous ESDM manufacturers is one of the key reasons behind this lag. The country does not have adequate infrastructure, support and R&D budget to achieve complete manufacturing of mobile phones locally.”
The Modi government is looking to fast-track deployment, considering that the impact of 5G is projected at around US$ 1 trillion by 2035.It has set up a high-powered task force, which suggested that the government define most of the regulatory framework by March 2019 to ensure early rollouts. However, unless measures are taken to improve the health of telecom operators, simplify spectrum acquisition norms, build fibre infrastructure and nurture a robust mobile handset ecosystem, India could miss the 5G bus as well.